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
Mr. Pelicas took his family out to dinner. The bill was $65.00. He would such as to leave a 20% tip. How much should he leave? Find 20% by multiplying $65 through the decimal e
how to find area under a curve
The average age of a woman and her daughter is 16 years. The ratio of their ages is 7: 1. Then the woman''s age is
Method to determine solution is absolute minimum/maximum value Let's spend a little time discussing some methods for determining if our solution is in fact the absolute minimum
do you have 3 digit and 4 digit number problem
What is Pythagorean Triples? A set of three numbers a, b, and c that can satisfy the equation A 2 +b 2 = c 2 , is called a Pythagorean triple. The following is a list of
Mathematical Problem Solving In 1945, mathematician George Polya (1887-1985) published a book titled How To Solve It in which he demonstrated his approach to solving problems.
Ribbon is wrapped around a rectangular box that is 10 by 8 by 4 in. Using the example provided, calculate how much ribbon is needed to wrap the box. consider the amount of ribbon d
larry spends 3/4 hours twice a day walking and playing with his dog. He spends 1/6 hours twice a day feeding his dog. how much time does larry spend on his dog each day?
Physical fitness association 1 mile run. It is known to have a normal distribution, mean 450 sec. SD 50 sec. How many in the top 10% fastest runners? Need to know what time they ha
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