In order to compute the value at each of the following modes to write a mathemat

Question

In order to compute the value at each of the following modes to write a mathematical expression to compute the value. For the following questions, you arc asked to write the mathematical expression to compute at each of the following nodes. Reminder! You are required to write the mathematical expression only, not the resulting compulation value. You will he asked to enter the rolling value in Part II. a) The mathematical expression to compute the value at node 1 is The mathematical to compute the value at node 3 is What is the resulting computation Value at each of the following nodes.

Explanation / Answer

As per mentioend in question I am here calculating only part 1

a) Mathematical Expression at node 1

Answer :

Value at Node 1 = (Probability of payoff 1* Payoff value at 1) +  (Probability of payoff 2 * Payoff value at 2) +  (Probability of payoff 3 * Payoff value at 3)  

   = (1/3 * 6) + (1/3 * 6) +( 1/3 * 5)

b) Mathematical Expression at node 2

Answer :

Value at Node 2 = (Probability of payoff 7* Payoff value at 7) +  (Probability of payoff 8 * Payoff value at 8) +  (Probability of payoff 9 * Payoff value at 9)  

=  = (1/3 * -3) + (1/3 * 7) +( 1/3 * 8)

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