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
Inverse Cosine : Now see at inverse cosine. Following is the definition for the inverse cosine. y = cos -1 x ⇔ cos y = x for
Topic : Use of Electronic whiteboards (ICT) in primary education in Australia and international. What are the key theories, concepts and ideas related to your topic? Wha
GUESS THE NUMBER THAT WHEN YOU SUBTRACT 6 AND THEN SUBTRACT 0 IS-14
Assume that the amount of air in a balloon after t hours is specified by V (t ) = t 3 - 6t 2 + 35 Calculate the instantaneous
Polar Coordinates Till this point we've dealt completely with the Cartesian (or Rectangular, or x-y) coordinate system. Though, as we will see, this is not all time the easie
write a computer program that will implement Steffensen''s method.
what is the result if 816.537 is rounded to the nearest tenth
at what price a 6.25%rs 100 share be quoted when the money is worth 5%
there are 5 small cubes and it reads the 5 small cubes is 1/100, then what is the ONE?
Ask if tanA+sinA=m and m^2-n^2=4 rute mn show that tanA-sinA=n
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