Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The expected monetary value method
The expected pay off as profit associated with a described combination of act and event is acquired by multiplying the pay off for that act and event combination by the probability of occurrence of the described event. The expected monetary value or EMV of an act is the sum of all expected conditional profits associated along with that act
Illustration
A manager has a choice among
i. A risky contract promising of shs 7 million along with probability 0.6 and shs 4 million along with probability 0.4 and
ii. A diversified portfolio consisting of two contracts along with independent outcomes each promising Shs 3.5 million along with probability 0.6 and shs 2 million along with probability 0.4
Could you arrive at the decision by using EMV method?
Solution
The conditional payoff table for the problem may be constructed as given below:
(Shillings in millions)
Event Ei
Probability (Ei)
Conditional pay offs decision
Expected pay off decision
(i)
Contract (ii)
Portfolio(iii)
Contract (i) x (ii)
Portfolio (i) x (iii)
Ei
0.6
7
3.5
4.2
2.1
E2
0.4
4
2
1.6
0.8
EMV
5.8
2.9
By using the EMV method the manager must go in for the risky contract that will yield him a higher expected monetary value of shs 5.8 million
Two circles C(O, r) and C 1 (O 1 , r 1 ) touch each other at P, externally or internally. Construction: join OP and O 1 P . Proof : we know that if two circles touch each
find probability
Find the least number that is divisible by all numbers between 1 and 10 (both inclusive). Ans: The required number is the LCM of 1,2,3,4,5,6,7,8,9,10 ∴ LCM = 2 × 2
E1) Create a guessing game for children of Class 2, to familiarise them with the concept of a time interval E2) How could you use group dancing to teach concepts of geometry? Th
f(x)=ex -3x
One of the simplest physical situations to imagine of is a falling object. Thus let's consider a falling object along with mass m and derive a differential equation as, when resolv
Polynomials in two variables Let's take a look at polynomials in two variables. Polynomials in two variables are algebraic expressions containing terms in the form ax n y m
Here are four problems. Four children solved one problem each, as given below. Identify the strategies the children have used while solving them. a) 8 + 6 = 8 + 2 + 4 = 14 b)
what is the domain of the function f(x)= 2x^2/x^2-9
how to solve the problems? methods to solve the question of joint lines
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd