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
Given f (x) =10x^3 - x^5 , find all intervals(in Interval Notation) of Concavity and the x-values of all Inflection Points.
how to solve
Prove that the intercept of a tangent between two parallel tangents to a circle subtends a right angle at the centre. Since Δ ADF ≅ Δ DFC ∠ADF = ∠CDF ∴ ∠ADC = 2 ∠CDF
In this part we look at another method to obtain the factors of an expression. In the above you have seen that x 2 - 4x + 4 = (x - 2) 2 or (x - 2)(x - 2). If yo
Q. Example of circle graphs? Ans. The United States Government pays obligations annually, called "outlays". Medicare contributes to the health and well being of aged an
jack and his mother paid $11.50 for tickets to the movies. An adult''s ticket costs $4.50 more than a child''s ticket. What was the cost of each ticket?
Ask question #Minimum 100 words accepted what is a ratio
how do you solve simultaneous equation?
how do you make a tnslation
f all the permutations of the letters of the word chalk are written in a dictionary the rank of this word will be?
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