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
the variables x and y are thought to be related by a law of the form ay^2=(x+b)lnx Where a and b are unknown constants. Can a and b be found and how.
Evaluate the following integral. ∫ (x+2 / 3√(x-3)) (dx) Solution Occasionally while faced with an integral that consists of a root we can make use of the following subs
Conditional probability - Rules of Probability This is the probability associated with combinations of events but given that some prior result has already been achieved with o
reduction
PROOF OF VARIOUS DERIVATIVE FACTS/FORMULAS/PROPERTIES Under this section we are going to prove several of the different derivative facts, formulas or/and properties which we en
An $80.00 coat is marked down 20%. It does not sell, so the shop owner marks it down an additional 15%. What is the new price of the coat? Find out 20 percent of the original p
Calculate the area of CIRCLE ? A circle is a set of all points that are at a given distance from a center point. The diameter (d) of a circle is the length of a line that goes
The Fourier series expansion for the periodic function, f ( t ) = |sin t | is defined in its fundamental interval. Taking π = 3.142, calculate the Fourier cosine series app
850ml is to be administered to a person over 8 hours using a drop factor of 20 drops/ml what is the flow rate in gtts/min ?
A valid identifier in the programming language FORTAN contains a string of one to six alphanumeric characters (the 36 characters A, B,...., Z, 0, 1,...9) starting with a letter. De
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