A company's cash position (measured in millions of dollars) follows a generalized Wiener process growing onaverage 0.2 m per quarter with volatility of 0.1m per quarter. How high must the initial cash balance be for theprobability of a negative balance after 2.00 years not to exceed 5%?

A company's cash position (measured in millions of dollars) follows a generalized Wiener process growing onaverage 0.2 m per quarter with volatility of 0.1m per quarter. How high must the initial cash balance be for theprobability of a negative balance after 2.00 years not to exceed 5%?

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

See similar textbooks

Similar questions

(2) Suppose that accumulation is governed by compound interest and the annual a51 and $5. Find effective rate of interest in the k-th year is .02 + .01k. Find T so that $5/a5 = a(T). S
urgent
If a bank offers annual interest of 7.5% or continuous interest of 7.25%, which has a better annual yield?
suppose that r(t)=250,000 is a continuous income stream for 5 years at 5% compounded continuously. find the future value?
The S&P 500 is currently at a value of 4,130 (as of July 29th, 2022 market close). On the same day, the Dec 22' S&P 500 futures contracts closed out the day at 4,152.25. These contracts mature on Dec 30th 2022 and thus have exactly 5 months remaining until their maturity. The continuously compounded risk-free rate is 2.50% per annum. The yield on the S&P 500 with continuous compounding is 1.52% per annum. What trade do we need to put on to take advantage of this arbitrage opportunity? O A. There is NO arbitrage opportunity available here. The S&P 500 futures are perfectly priced in line with No Arbitrage. Thus, the right arbitrage trade is to do nothing. O B. Go long the S&P 500 futures, short the S&P 500 Index and invest any excess cash we have at 2.5% interest. O C. Go short the S&P 500 futures, and borrow any money needed at 2.5% to buy the S&P 500 index.
2. Suppose that a bacteria population is dying off at a rate of 30% per day. How much of the population is dying off every hour? (Round to 5 decimal places)
Can i have a worked example please. Thanks!
A new restaurant is expected to produce a continuous income stream at the rate of R(t) = 100, 000 dollars per year for the next 5 years. In the prevailing interest rate is 4% per year compounded continuously, find the future value of the income stream.
Find the time required for the investment given in the table below to grow to the specified amount.
4. A money lender finds that due to a fall in the annual rate of interest from 8% to 7-%, his yearly income diminishes by 61.50. His capital is (1) 3 22400 (2) 23800 (3) 24600 (4) 26000
5. How is the flow of investors' money into stock mutual funds related to the flow of money into bond mutual funds? Data are collected on the net new money flowing into stock and bond mutual funds in the years 1985 to 2000, in billions of dollars. "Net" means that funds flowing out are subtracted from those flowing in. If more money leaves than arrives, the net flow will be negative. To eliminate the effect of inflation, all dollar amounts are in "real dollars" with constant buying power equal to that of a dollar in the year 2000. Below is Minitab output for a regression line using the stock values as the explanatory variable. Regression Analysis: Bonds versus Stocks The regression equation is Bonds = 53.4 - 0.196 Stocks Predictor Coef SE Coef T P Constant 53.41 22.99 2.32 0.036 Stocks -0.1962 0.1550 -1.27 0.226 S= 59.8813 R-Sq = 10.3% R-Sq(adj) = 3.9% (a) What is the conclusion from a test of the slope of the regression line at the 0.05 significance level? Recall that the hypotheses…
True or False Using CAGR can help investors compare growth rates over time between two companies or funds that would otherwise be difficult to compare due to volatility in year-to-year growth.