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
Q. What is a Mixed Number? Ans. A mixed number is an integer, along with a fractional part, which has the same sign. (Therefore, a mixed number always has two parts.) M
what is 8e^3x + 4 = 15
Determine or find out the domain of the subsequent function. r → (t) = {cos t, ln (4- t) , √(t+1)} Solution The first component is described for all t's. The second com
The ratio of boys to girls at the dance was 3:4. There were 60 girls at the dance. How many boys were at the dance? Use a proportion comparing boys to girls at the dance. Boys/
Series - Convergence/Divergence In the earlier section we spent some time getting familiar with series and we briefly explained convergence and divergence. Previous to worryin
What is homomorphism ring
10000+9854
Chi-square hypothesis tests as Non-parametric test(X2) They contain amongst others i. Test for goodness of fit ii. Test for independence of attributes iii. Test
Using Substitution Solving Polynomial Equations ? Solve : (x 3 + 4) 2 - 15 (x 3 + 4) + 36 = 0. You might be tempted to multiply everything out and factor. However, there
Properties of Vector Arithmetic If v, w and u are vectors (each with the same number of components) and a and b are two numbers then we have then following properties. v →
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