Suppose that the market has a 70% chance of being favorable and a 30% chance of being unfavorable. A favorable market will yield a profit of $300,000, while an unfavorable market will yield a profit of $20,000
What is the expected monetary value (EMV) in this situation?
EMV = (0.7 )($300,000 ) + (0.3 )($20,000 ) = $210,000 + $6,000 = $216,000
Business
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