the following payoff table, the probability of event 1 is 0.8, the probability of event 2 is 0.1, and the probability of event 3 is 0.1 ACTION ACTION EVENT A ($) B ($) 1 50 10 2 300 100 3 500 200 a. Compute the Expected Monetary Value (EMV)for action B

the following payoff table, the probability of event 1 is 0.8, the probability of event 2 is 0.1, and the probability of event 3 is 0.1 ACTION ACTION EVENT A ($) B ($) 1 50 10 2 300 100 3 500 200 a. Compute the Expected Monetary Value (EMV)for action B

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

See similar textbooks

Related questions

Q: There is a 0.9989 probability that a randomly selected 28-year-old male lives through the year. A…

Q: Remember, the expected value of a probability distribution is a statistical measure of the average…

A: Given:- The expected value of a probability distribution is a statistical measure of…

Q: A man wishes to purchase a life insurance policy that will pay the beneficiary $30,000 in the event…

Q: There is a 0.9989 probability that a randomly selected 28-year-old male lives through the year. A…

A: We have to find given probability.

Q: If the company wants to offer a 2 year extended warranty, what price should they charge so that…

A: A company that makes computers estimates that 2% of their hard drives will fail after the original…

Q: A certain type of bond pays an interest rate of 5%, but if it defaults, you lose the total value of…

A: The interest in a bond is 5%. The prob. that the bond default is 1%. The amount invested is $100.…

Q: A man wishes to purchase a life insurance policy that will pay the beneficiary $25,000 in the event…

A: There is 92% percent chances that company will pay nothing and 8 % chances that company will pay…

Q: 12. According to Bristol Mutual Life Insurance's mortality table, the probability that a 20-year-old…

A: Given data According to Bristol mutual life insurance's mortality table the probability that a 20…

Q: There is a 0.9984 probability that a randomly selected 29-year-old male lives through the year. A…

Q: There is a 19986 probability that a randomly selected 35-year-old male lives through the year (based…

A: Suppose x is the net income of the life insurance policy to the company through the year.

Q: The following payoff table was developed. Let the probability of state of natures are as follows:…

A: The formula to compute the expected monetary value is: Here, P(S1) = 0.30, P(S2) = 0.40, and P(S3)…

Q: An insurance policy sells for $600. Based on past data, an average of 1 in 50 policyholders will…

Q: A single share of a stock was purchased prior to the company's release of its quarterly report.…

Q: There is a 0.9982 probability that a randomly selected 27-year-old male lives through the year. A…

A: The probability that the randomly selected 27-year-old male lives through the yearThe amount of…

Q: Use the accompanying payoff table with event probabilities to answer parts (a) through (h).…

A: Note: In case of multiple subparts, answer to first three subparts will be provided. Kindly post…

Q: Suppose a life insurance company sells a $160,000 one-year term life insurance policy to a…

Q: A company estimates that 0.1% of their products will fail after the original warranty period but…

A: The products' proportion estimated by the company that will fail after the original warranty…

Q: et X be a total $ amount on a randomly select InstaCart order. The expected value of such order is…

A: Let X be the total amount on a randomly select instaCart order. The expected value of such order is…

Q: Your school is selling raffle tickets as a fundraiser. They sell tickets for $5 each, there are 10…

Q: Suppose a life insurance company sells a $260,000 one-year term life insurance policy to a…

A: Given data: The amount which is required to purchase the policy = $200. The probability that the…

Q: 6.) Investment Club. The triple L investment club is considering purchasing a certain stock. After…

A: Given that Chance of making $10,000 = 60% = 0.60 Chance of making break even = 10% = 0.10 Chance…

Q: John and Larry are fundraisers for UNO. A wealthy benefactor says that he will match whatever John…

Q: Suppose a life insurance company sells a $220,000 one-year term life insurance policy to a…

A: Cost incurred by company if died = -220000+260 = -219740 Cost received by company if not died= 260…

Q: 1. ABC inc. stock is currently selling for $30, one year from today the stock price can either…

A: The objective is to calculate the value of a European put option using the Binomial Option Pricing…

Q: An investor is considering a $25,000 investment in a start-up company. She estimates that she has…

A: The total investment is $25000. The probability of a $15000 loss is 0.05 The probability of a $20000…

Question

For the following payoff table,

the probability of event 1 is 0.8,

the probability of event 2 is 0.1,

and the probability of event 3 is 0.1

	ACTION	ACTION
EVENT	A ($)	B ($)
1	50	10
2	300	100
3	500	200

a. Compute the Expected Monetary Value (EMV)for action B

b. Compute the Expected Opportunity Loss (EOL) for action B

c. Compute the coefficient of variation for action B

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

Suppose a life insurance company sells a $270,000 one-year term life insurance policy to a 22-year-old female for $230. The probability that the female survives the year is 0.999552. Compute and interpret the expected value of this policy to the insurance company. The expected value is $. (Round to two decimal places as needed.)
There is a 0.9984 probability that a randomly selected 31-year-old male lives through the year. A life insurance company charges $159 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $80,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 31-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? The value corresponding to surviving the year is $ The value corresponding to not surviving the year is $ (Type integers or decimals. Do not round.)
Q3. Suppose that the market default rate for bonds is given by 0.01, i.e., the probability the market believes that the company may not be able to pay the owner of the bonds is 0.01. Now a credit default swap (CDS) is sold at fair price $ 0.01 per unit. Ackman expects that the true default rate is 0.05, not 0.01. Ackman bought 67 billion units of CDS at the price $ 0.01 per unit. a. Suppose that Ackeman's expectation about the default rate is not correct. I.e., the true default rate for bonds is given by 0.01. Find the cost of the purchase. Find the expected payoff. Find the profit. b. Suppose that Ackeman's expectation is correct. Find the cost of the purchase. Find the expected payoff. Find the profit.
Suppose a neighborhood grocery store buys 5 containers of skim milk at the wholesale price of $11 per container and sells it for $22 per container. After the expiration date, unsold milk is removed from the shelves and the grocer receives a credit from the distributor equal to three-fourths of the wholesale price. If the probability distribution of the variable is X and the number of containers sold from this lot is x f(x) 0 1/15 1 2/15 2 2/15 3 3/15 4 4/15 5 3/15 Calculate the expected utility. (Round to two decimal places)
There is a 0.9985 probability that a randomly selected 33 year old male lives through the year. A life insurance company charges $155 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $100,000 as a death benefit. From the perspective of the 33 year old male, what are the monetary values corresponding to the two events of surviving the year and not surviving?
An analyst attempting to predict a corporation’s earnings next year believes that the corporation’s business is quite sensitive to the level of interest rates. He believes that, if average rates in the next year are more than 1% higher than this year, the probability of significant earnings growth is 0.1. If average rates next year are more than 1% lower than this year, the probability of significant earnings growth is estimated to be 0.8. Finally, if average interest rates next year are within 1% of this year’s rates, the probability for significant earnings growth is put at 0.5. The analyst estimates that the probability is 0.25 that rates next year will be more than 1% higher than this year and 0.15 that they will be more than 1% lower than this year.a. What is the estimated probability that both interest rates will be 1% higher and significant earnings growth will result?b. What is the probability that this corporation will experience significant earnings growth?c. If the…
Solve this easy question
2. If an insurance company issues a $200,000 five-year policy on a man whose probability of living for another five years is .994, what is the minimum that the expected cost to the company for this policy?