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
[2 5] . [7 8}
is mass marketing completely dead?
A number x is chosen at random from the numbers -3, -2, -1, 0 1, 2, 3. What is the probability that | x| Ans : x can take 7 values To get |x| Probability (| x |
Hi there, I am doing a math assignment at current, however I am having trouble with a question about dumpy level, and finding whether the slope of the block will be suitable for th
A train goin from delhi to jaipur stops at 7 intermediate stations. 5 persons enter the train during the journey with 5 difefrent tickets of same class . How mant different set of
sin^2alpha *sec^2beta +tan^2 beta *cos^2alpha=sin^2alpha+tan^2 beta
Find the sum-of-products expression for subsequent function, F (x,y,z) = y + Z‾ Ans: The sum of the product expression for the following function f is DNF (disjunc
kikos toy company boasts that their remotes have the greatest range . their claim is that you can access their signal up to 1320 feet from their device . a competing company, yozzo
Kelli calls her grandmother every month Kelli also calls her cousin.If Kelli calls her cousin in January, how many calls will Kelli have made to her grandmother and her cousin by t
a sketch of two dimensional system
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