Question
A baker must decide how many specialty cakes to bake each morning. From past experience, she knows that the daily demand for cakes ranges from
A baker must decide how many specialty cakes to bake each morning. From past experience, she knows that the daily demand for cakes ranges from 0 to 3. Each cake cost $3.00 to produce and sells for $8.00 and any unsold cakes are thrown into the garbage at the end of the day.
| Payoff Table | Acts: Produce | |||
| States of Nature: | a0: | a1: | a2: | a3: |
| Demand | Bake 0 cake | Bake 1 cake | Bake 2 cakes | Bake 3 cakes |
| s0: 0 cake | 0 | -$3.00 | -$6.00 | -$9.00 |
| s1: 1 cake | 0 | $5.00 | $2.00 | -$1.00 |
| s2: 2 cakes | 0 | $5.00 | $10.00 | $7.00 |
| s3: 3 cakes | 0 | $5.00 | $10.00 | $15.00 |
P (S1) = P (S2) = P (S3) = P (S4) = 0.25
Determine the EMV*. Keep to one decimal place.?
Determine the EMV decision.?
Determine the EOL*. Keep to one decimal place.?
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Covered Calls Option Trading Strategy
Authors: Andrew P.C.
1st Edition
1549658697, 978-1549658693
