When investment projects are described by subjective probability distributions, the measure of investment worth becomes a difficult task. One of the basic assumptions underlying investment analysis under risk is that decision makers would base their decisions on only the first two statistical moments of the probability distribution of returns. However, the mean and variance can adequately describe only certain symmetric distributions such as the normal and the uniform distributions. As a result, if probability distributions of investment returns are actually asymmetric, the classic first two moments analysis ignores information (skewness) that is needed to make a better investment decision. Even though the importance of the third moment in project selection has been recognized, nowhere in the literature is there a successful application of the concept to a regular periodic decision process where the decision maker lacks full knowledge of his future as well as present investment opportunities. Therefore, it is the purpose of this research to investigate the effectiveness of utilizing the higher statistical moments in capital rationing situation.
| Identifer | oai:union.ndltd.org:ucf.edu/oai:stars.library.ucf.edu:rtd-1479 |
| Date | 01 April 1980 |
| Creators | Ekere, Edet Jonathan |
| Publisher | University of Central Florida |
| Source Sets | University of Central Florida |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | Retrospective Theses and Dissertations |
| Rights | Public Domain |
Page generated in 0.0251 seconds