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
I am interested in school mathematics online assignments , homework help, projects etc. I have good knowledge of mathematics and experience of 15+ years teaching mathematics in cen
how to do this project
if A be the area of a right triangle and b be one of the sides containing the right angle, prove that the length of the altitude on the hypotenuse is 2Ab/rootb^4+4A^2
Two circles touching internally at O. OXY, OAB straight lines, the latter passing through the centres. Prove that OX : OY = OA : OB. Given : Two circles touching internally a
a car comes to a stop from a speed of 30m/s in a distance of 804m. The driver brakes so as to produce a decelration of 1/2m per sec sqaured to begin withand then brakes harder to p
solve x+y= 7 and x-y =21
Let u = sin(x). Then du = cos(x) dx. So you can now antidifferentiate e^u du. This is e^u + C = e^sin(x) + C. Then substitute your range 0 to pi. e^sin (pi)-e^sin(0) =0-0 =0
Characteristics of Time Series Time series has the given characteristics. a) A long term trend (T) -tendency of the whole series to fall and rise. b) Seasonal variati
The scores of students taking the ACT college entrance examination are normally distributed with a mean m = 20.1 and a standard deviation s = 5.8. A single student is selected a
How many permutations of the letters A B C D E F G H consist of string DEF? Ans: It is the dilemma of finding number of words that can be formed along with the given 8 lette
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