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
Determine if the subsequent series is convergent or divergent. Solution As the cosine term in the denominator doesn't get too large we can suppose that the series term
A circular print is being matted in a square frame. If the frame is 18 in by 18 in, and the radius of the print is 7 in, what is the area of the matting? (π = 3.14) a. 477.86 in
a ,b,c are complex numbers such that a/1-b=b/1-c=c-1-a=k.find the value of k
The Definition of the Derivative : In the previous section we saw that the calculation of the slope of a tangent line, the instantaneous rate of change of a function, and the ins
a couple q''s
State the following statement as a disjunction (in DNF) as well using quantifiers: There does not exit a woman who has taken a flight on each airline in the world.
Let m be a positive integer with m>1. Find out whether or not the subsequent relation is an equivalent relation. R = {(a,b)|a ≡ b (mod m)} Ans: Relation R is illust
The exponential functions are useful for describing compound interest and growth. The exponential function is defined as: y = m. a x where '
Tests for relative minimum For a relative minimum point there are two tests: i.The first derivative, which is (dy)/(dx) = f´(x) = 0 ii.The second derivative, which i
Prove that one of every three consecutive integers is divisible by 3. Ans: n,n+1,n+2 be three consecutive positive integers We know that n is of the form 3q, 3q +1, 3q +
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