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
Higher-Order Derivatives It can be seen that the derivative of a function is also a function. Considering f'x as a function of x, we can take the derivative
a business is owned by three people.the first owns 1/12 of the business and the second owns 1/6 of the business. what fractional part of the business is owned by the third person
sin2A+cos2A
how to solve this? y = 7x - 12 y = x2 Solve the system using substitution.
Every point (x,y) on the curve y=log2 3x is transferred to a new point by the following translation (x',y')=(x+m,y+n), where m and n are integers. The set of (x',y') form the curve
I need help solving this question...You have to design a rectangular flyer. The top and bottom must have 5" margins and the left and right sides must have 2" margins. If you must
A company is setting up an assembly line to produce 100 units/hour. The table shown below identifies the work elements, times, and immediate predecessors. a) What cycle tim
how to round off numbers to the nearest tens and to the nearest hundred
Suppose you start saving today for a $55,000 down payment that you plan to make on a house in 7 years, assume that you make no deposits into the account after the initial deposit,
in the form of linear graph interpret the ralationship between two quantities
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