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
It's now time to do solving systems of differential equations. We've noticed that solutions to the system, x?' = A x? It will be the form of, x? = ?h e l t Here l and
Which of the subsequent terms does NOT describe the number 9? Nine is NOT prime since it has 3 factors; 1, 3, and 9. Prime numbers have only 2 factors.
A firm buys a product using the price schedule given in the table: The company estimate holding costs at 10% of the purchase price per year and ordering costs at $40 per order .
A boy covered half of distance at 20km/hr and rest at 40kmlhr. calculate his average speed.
1. Find the APY for the bank described below- A bank offers an APR of 4% compounded monthly. 2. Use the compound interest formula to compute the balance in the following a
Two circles touching internally at O. OXY, OAB straight lines, the latter passing through the centres. Prove that OX : OY = OA : OB. Given : Two circles touching internally a
The sum of the squares of two consecutive positive odd integers is 74. What is the value of the smaller integer? Let x = the lesser odd integer and let x + 2 = the greater odd
In pharmaceutical product research doctors visit the place to learn what
Gm signal is better than am signal becuase
A compound fraction is a fraction that has other fractions inside its numerator or denominator. Here's an example: While compound fractions can look really hairy, they're r
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