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
Finding the number of Permutations of 'n' dissimilar things taken 'r' at a time: After looking at the definition of permutations, we look at how to evolve a
Three quantities a, b and c are said to be in harmonic progression if, In this case we observe that we have to consider three terms in o
Assumptions The figures known are assumed to be a normal series, that is a series without any violent, unexplained fluctuations in the values. The
In the riangle ABC the AB=12 cm,AC=28 cm and angle ABC=120 degrees.BC=?
can anyone solve this assigment: D=lsqrt(3x-5) sqrt(2x)l =3 l -1 1 l
A train goin from delhi to jaipur stops at 7 intermediate stations. 5 persons enter the train during the journey with 5 difefrent tickets of same class . How mant different set of
In class 1, the teacher had written down the digits 0,1, ...., 9 on the board. Then she made all the children recite the corresponding number names. Finally, she made them write th
7=1/w-4(1/11
A boy standing on a horizontal plane finds a bird flying at a distance of 100m from him at an elevation of 300. A girl standing on the roof of 20 meter high building finds the angl
Erin is painting a bathroom along with four walls each measuring 8 ft through 5.5 ft. Ignoring the doors or windows, what is the area to be painted? The area of the room is the
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