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
X^2 – y^2 – 2y - 1
Explain Introduction to Non-Euclidean Geometry? Up to this point, the type of geometry we have been studying is known as Euclidean geometry. It is based on the studies of the a
Example of Implicit differentiation So, now it's time to do our first problem where implicit differentiation is required, unlike the first example where we could actually avoid
what does the three mean in the power ?
Q) In a lottery ,a person chooses six different natural numbers at random 1to 20,and if there six numbers match with the six numbers already fixed by the lottery committee ,he win
Computing Limits :In the earlier section we saw that there is a large class of function which allows us to use to calculate limits. However, there are also several limits for whi
for what value of k,the following system of equations have infinite solutions?kx + 5y -(k-5)=0;20x +ky - k=0
which ratio is largar. 1. 15:16 or 24:25
A car travels 283 1/km in 4 2/3 hours .How far does it go in 1 hour?
round 64 to the nearest 10
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