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
online Exam
#
i have trouble going through problem in this lesson. Markdown and Markups are theh ones im stuck in
The larger of two supplementary angles exceeds the smaller by 180, find them. (Ans:990,810) Ans: x + y = 180 0 x - y = 18 0 -----------------
Determine the inverse of the following matrix, if it exists. We first form the new matrix through tacking onto the 3 x 3 identity matrix to this matrix. It is, We
Find out the volume of the solid obtained by rotating the region bounded by y = x 2 - 2x and y = x about the line y = 4 . Solution: Firstly let's get the bounding region & t
Suppose m be a positive integer, then the two integer a and b called congurent modulo m ' if a - b is divisible by m i.e. a - b = m where is an positive integer. The congru
do we calculate midpoints from classes or from class boundaries
if area of a rectangle is 27 sqmtr and it perimeter is 24 m find the length and breath#
Q. Define Combined Functions? Ans. We are often interested in functions which combine a trigonometric function with another type of function. For example, y = x + sinx wi
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