certainty equivalent

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Certainty equivalent

An amount that would be accepted today (risk free) in lieu of a chance to receive a possibly higher, but uncertain, amount.

Certainty Equivalent

A small, zero-risk return an investor may trade for a larger potential return with an associated risk. Companies offer certainty equivalent returns on certain investments and use their demand to determine the level of risk an investor will accept for a given return from the company.

certainty equivalent

The minimum sum of money a person would accept to forgo the opportunity to participate in an event for which the outcome, and therefore his or her receipt of a reward, is uncertain. For example, suppose you are told to draw one card from a full deck of cards. If you draw a red card you win $100 and if you draw a black card you win nothing. If you would accept $40 to forgo the selection and possibility of winning, $40 is the certainty equivalent of the outcome of the event. Certainty equivalents are used in evaluating risk.

certainty equivalent

see DECISION TREE.
References in periodicals archive ?
The problem for moralists is the degree of certainty with which this can be established.
He claimed that philosophers had forsaken their responsibility to explain the findings of science as they came to light, and to provide leadership in the continuous forging of a world view compatible with those findings--that they had, instead, lost themselves in the "quest for certainty.
Therefore, for the small business taxpayer entering a foreign market with an aggressive market-share strategy that desires transfer-pricing certainty, the small taxpayer APA program may be a little known, but attractive, consideration.
The Trust and its bondholders still have the same stream of cash they had before, plus an extra benefit: absolute certainty of payment, in place of whatever uncertainty comes with any payment stream backed by real estate.
On a practical level, it establishes symbolization schemes for representing attribute certainty on thematic maps.
Peacock reads pictures and designs as though they were prose whose meaning is not subject to doubt, and terms like "mannerism" take on the certainty of a piece of granite.
Researchers always strive for more certainty by ruling out alternative explanations.
The certainty of settlement of payments associated with these transactions is critical to the efficiency of the U.
Blood alcohol results can now be reported with a Statement of Certainty(TM)which defines with 99% certainty whether a person's blood alcohol concentration exceeds various legal limits.
Certainty in terms of the timescales for processing applications to decision, be it a yes or no; certainty of the policy context so stakeholders will know what is likely to be acceptable or unacceptable; certainty that the views of local communities will be sought and considered in a meaningful way and certainty that the planning system that we transfer to councils in 2015 will be fair and fit for purpose.
Business Certainty Managed Service Company Significantly and Consistently Reduced Poor End-User Experience Recovery Times Compared to Traditional Monitoring Products
As a professional association, TEI is firmly committed to maintaining a tax system that works -- one that is administrable and, because it provides certainty, that taxpayers can comply with in a cost-efficient manner.