Question

Expected monetary value (EMV) is:________.a. the average or expected value of the decision if you knew what would happen ahead of timeb. the weighted average of possible monetary values, weighted by their probabilitiesc. the average or expected value of the information if it was completely accurated. the amount that you would lose by not picking the best alternative

Answer 1

The complete question is:

Expected monetary value (EMV) is

A) the average or expected monetary outcome of a decision if it can be repeated a large number of times.

B) the average or expected value of the decision, if you know what would happen ahead of time.

C) the average or expected value of information if it were completely accurate.

D) the amount you would lose by not picking the best alternative.

E) a decision criterion that places an equal weight on all states of nature.

Answer:

the average or expected monetary outcome of a decision if it can be repeated a large number of times.

Explanation:

Expected monetary value is how much money a business forecast it will gain by making a decision. It is based on probability and becomes more complicated as you get more complex scenarios.

For example if a party is taking another to court the EMV is the realistic estimate of what the party can gain in settlement at court.

The expected monetary value should be replicable, that is if the decision is taken many times it should result in an average of the EMV amount.