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
A closed conical vessel of radius 36 cm and height 60 cm, has some water. When vertex is down then the height of water is 12 cm. What is the height of water when vertex is up?
The Invisible Effort : Although the development of children is a process, what is noticed and given recognition to is the end-product. We usually speak of children having achieve
The Cartesian product (also called as the cross product) of two sets A and B, shown by AΧB (in the similar order) is the set of all ordered pairs (x, y) such that x€A and y€B. What
Two reservoirs of equal cross sectional areas (315 m 2 ) and at equal elevations are connected by a pipe of length 20 m and cross sectional area 3 m 2 . The reservoir on the left (
prove that 0!=1
Find out the length of the parametric curve illustrated by the following parametric equations. x = 3sin (t) y = 3 cos (t) 0 ≤ t ≤ 2? Solution We make out that thi
how long is the radius of car tyre?
If a+b+c = 3a , then cotB/2 cotC/2 is equal to
whats 100 + 90 - 6
States the negation of the statement ∀x ∃y (xy = 1) so that no negation precedes a quantifier. Ans: The negation of the following statement is written as ~ [∀x ∃y (xy = 1)]. An
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