What is meant by the expected monetary value (EMV)of a decision alternative?

Decision Alternative

An available option or course of action that can be taken in a decision-making process.

Expected Monetary Value

A calculation used in decision-making to determine the average outcome when the future includes scenarios that may or may not happen.

Master the essentials and calculation techniques for expected monetary value (EMV) and expected opportunity loss (EOL).

Verified Answer

Final Answer :

The EMV of a decision alternative is the sum of the products of the payoffs (profit or loss)and the state of nature probabilities.

Learning Objectives

Master the essentials and calculation techniques for expected monetary value (EMV) and expected opportunity loss (EOL).