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An investment decision PROFIT Outcome 1 20,000 (d) Option A Outcome 2 2,000 = EMV (A) 28,000p + 10,000q - 8,000 (q) Outcome 3
An investment decision PROFIT Outcome 1 20,000 (d) Option A Outcome 2 2,000 = EMV (A) 28,000p + 10,000q - 8,000 (q) Outcome 3 -8,000 (1-p-q) Outcome 1 8,000 (d) Option B Outcome 2 6,000 (q) EMV (B) = 10,000p + 8,000q - 2,000 Outcome 3 (1-p-q) -2,000 Option C 5,000 EMV (C) = 5,000 How does the optimal strategy change as a function of p & q?
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Calculus
Authors: Dale Varberg, Edwin J. Purcell, Steven E. Rigdon
9th edition
131429248, 978-0131429246
