Example 21.3 A group of volunteers of a service organisation raise money each year by selling gift articles outside a stadium after a football match between teams A and B. They can buy any of the three different articles from a dealer. Their sales are mostly dependent on the team that wins the match. A conditional payoff table is as under: Payoff Table Type of gift articles II III Team A wins Rs 1,500 Rs 1,000 Rs 700 Team B wins Rs 700 Rs 500 Rs 900 (i) Construct the opportunity loss table. (ii) Which type of gift article should the volunteers buy if the probability of team A's wining is 0.7?

Questions a. - c. refer to the following data.  You estimate a 3-factor return-generating process for 5 large portfolios with the following results.       a. Which two portfolios are functional equivalents according to the Arbitrage Pricing Theory? b. What is the expected return on portfolio B? c. Suppose that the market is currently pricing portfolio E so that its expected return is 8% and pricing portfolio B so that its expected return is 10%.  Describe the forces that will bring about equilibrium according to the APT.

Boran Stockbrokers, Inc., selects four stocks for the purpose of developing its own index of stock market behavior. Prices per share for a year 1 base period, January year 3, and March year 3 follow. Base-year quantities are set on the basis of historical volumes for the four stocks. Stock A B C D Jan Mar Stock = = A - B с D Industry Oil Computer Steel Real Estate January Year 1 Quantity 100 150 75 50 Price per Share ($) March Year 1 Base 31.50 65.00 40.00 16.00 Compute the price relatives for the four stocks making up the Boran index. (Round your answers to one decimal place.) Price Relative January Year 3 22.75 49.00 32.00 6.50 March Year 3 22.50 47.50 29.50 Use the weighted average of price relatives to compute the January year 3 and March year 3 Boran indexes. (Round your answers to one decimal place.) I, 2.75

10. Suppose a will decreed that three siblings will each receive a cash inheritance according to the following: The eldest receives 3 times as much as the youngest, and twice as much as the middle sibling. Answer the following. a. If the youngest sibling receives x dollars, how much do the other two receive? b. If the middle sibling receives y dollars, how much do the other two receive? c. If the oldest sibling receives z dollars, how much do the other two receive?

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