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
Use L''hopital''s rule since lim X-->0 1-cos(x)/1-cos(4x) is in the indeterminate form 0/0 when we apply the limt so by l''hoptital''s rule differentiate the numerator and den
Changing The Base Of The Index For comparison reasons if two series have different base years, this is difficult to compare them directly. In such cases, it is essential to ch
How does finding the unit rate help make smart decisions?
properties
Describe the Sample of Exponents ? Imagine, for example, that you are the P.E. coach at your school, and you need to divide one of your classes into teams. Your team has 45 stu
Mona purchased one and a half pounds of turkey at the deli for $6.90. What did she pay per pound? Divide the cost of the turkey by the weight; $6.90 ÷ 1.5 = $4.60.
korda ab e ndan rrethin me qender o ne dy harqe njeri prej tyre eshte sa trefishi i tjetrit gjeni masat e harqeve dhe masat e trekendeshit aob
Define Markov chain Random processes with Markov property which takes separate values, whether t is discrete or continuous, are known as Markov chains.
Callie's grandmother pledged $0.50 for each mile Callie walked in her walk-a-thon. Callie walked 9 miles. How much does her grandmother owe? Multiply the number of miles (9) th
Solve the subsequent quadratic equation: Solve the subsequent quadratic equation through taking the square roots of both sides. 3x 2 = 100 - x 2 Solution: Step 1
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