In the past four years, the annual returns of one company’s stock are 12%, 18%, and –14%, and 7%. a) What is the geometric average return? b) What is the arithmetic average of the returns? c) According to an economist’ forecast on the Year 2020, the probabilities of repeating the performances of the former four years are 30%, 30%, 20%, and 20%, respectively. What is the expected return of the stock in the Year 2020
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In the past four years, the annual returns of one company’s stock
are 12%, 18%, and –14%, and 7%.
a) What is the geometric average return?
b) What is the arithmetic average of the returns?
c) According to an economist’
the performances of the former four years are 30%, 30%, 20%, and 20%, respectively.
What is the expected return of the stock in the Year 2020
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- A company has established that the relationship between the sales price for one of its products and the quanlity sokld per month is approximalely p=75-0. 1D (D is the demand or quantity sold per month and p is the price in dollars). The fixed cost is $1,000 per month and the variable cost is $30 per unit produced. a. What is the maximum profit per month for this product? b. What is the range of profitable demand during a month? a. The maximum profit per month for this product is $. (Round to the nearest dollar.) b. The range of profitable demand during a month is from units to units. (Round up the lower limit and down the upper limit to the nearest whole number.)A farmer believes there is an equal chance that the next growing season will be abnormallyrainy. His expected return function has the formExpected return = 0.5lnYNR + 0.5lnYRwhere YNR and YR represent the farmer’s income in the states of “normal rain”and “rainy,” respectively.Suppose the farmer must choose between two crops that promise the following incomeprospects:Crop YNR YRMaize $14,000 $5,000Cotton $9,500 $7,500a) Which of the crops will he plant?b) Suppose the farmer can plant half his field with each crop. Would he choose to do so?Explain your result.c) What mix of Maize and Cotton would provide maximum expected utility to this farmer?d) Would Maize crop insurance, available to farmers who grow only Maize, which costs$2,000 and pays off $4,000 in the event of a rainy growing season, cause this farmer tochange what he plants?You are at a casino and there are three slot machines you can use to bet on. You must have a return of .5% of higher on what you are betting. Below is the expected returns for each slot machine under various scenarios. What combination of machines do you play to maximize your average return? Decision Variables Data Slot 1 100.0% Monday Tuesday Wednesda Average Slot 2 0.0% Slot #1 8% 4% 5% 5.667% Slot 3 0.0% Slot #2 2% -3% 3% 0.667% Slot #3 6% -2% 4% 2.667% Objective 5.7% Constraints 0.08 >= 0.5% 0.04 >= 0.5% 0.05 >= 0.5% 100.0% .: 100%
- A company invests on selling computer units worth Php 32,000.00. The probability of maintaining this price throughout the year is 65% while that of less or more than 10% the expected are 15% and 20%, (a) what is the probability that the selling price for that year is more than the expected price? a. 0.8 b. 0.85 c. 0.25 d. 0.2 e. 1 f. 0.15 g. 0.65Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with a coupon of 4.0% If it is currently selling at par and the probability distribution of its yield to maturity a year from now is as shown in the table below. (Assume the entire 4.0% coupon is paid at the end of the year rather than every 6 months. Assume a par value of $100.) (Leave no cells blank - be certain to enter "O" wherever required. Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Economy Probability Coupon Interest YTM Price Capital Gain HPR Boom 0.25 10.0 % Normal Growth 0.50 9.0 % Recession 0.25 8.0 %A department store is about to order deluxe, standard, and economy grade DVD players for next year's inventory. The state of the nation's economy (fate) during the year will be a factor on sales for that year. Records over the past 5 years show that if the economy is up, the store will net 4, 3, and 1 million dollars, respectively, on sales of deluxe, standard, and economy grade models; if the economy is down, the company will net – 1, 0, and 3 million dollars, respectively, on sales of deluxe, standard, and economy grade models. Complete parts A through D below. ... (A) Set up a payoff matrix for this problem. Economy (fate) Up Down Deluxe Dept. Store Standard Economy
- "A financial investor has $31,000 to invest. The choices have been narrowed down to the following two options.-OPTION 1:Invest in a foreign bond that will mature in one year. This will entail an immediate brokerage fee of $100. For simplicity, assume that the bond will provide interest of $2,470, $2,130, or $1,527 over the one-year period and that the probabilities of these occurrences are assessed to be 0.29, 0.43, and 0.28, respectively.-OPTION 2:Invest in a $31,000 certificate with a savings-and-loan association. Assume that this certificate has an effective annual rate of 5.6%.Which form of the investment should the investor choose in order to maximize her expected financial gains? Enter the expected net gain (total return - initial investment - fee) of the preferred option."Describe the relationship between Expected Value, Expected Utility and Certain Equivalent (at least 150 words)You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your current Salary. You look into opening a small grocery store. Suppose that the store has annual cost of $150,000 for labor, $60,000 for rent and $30,000 for equipment. There is one-half probability that revenues will be $20,000 and a half probability that revenue will be $420,000 a. WHat is your accounting and economic profit? b. Will you quit your job and try your hand at being an entrepreneur? c. Suppose the government imposes a 25 percent tax on accounting profits: this tax is only levied if a firm is earning positive accounting profits. What will your after tax accounting profit be in the low revenue case?
- You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your current Salary. You look into opening a small grocery store. Suppose that the store has annual cost of $150,000 for labor, $60,000 for rent and $30,000 for equipment. There is one-half probability that revenues will be $20,000 and a half probability that revenue will be $420,000 a. In the low revenue Situation, what will your accounting profit or loss be? b. In the high revenue situation, what will your accounting profit or loss be? c. On average, how much do you expect your revenue to be?You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your current Salary. You look into opening a small grocery store. Suppose that the store has annual cost of $150,000 for labor, $60,000 for rent and $30,000 for equipment. There is one-half probability that revenues will be $20,000 and a half probability that revenue will be $420,000 a. In the high revenue case? what will your average after tax Accounting profit be? hat about your average after tax economic profit? will you Want to quit your job and try your hand at being an entrepreneur? other things equal, does the imposition of the 25 percent profit tax increase or decrease the supply of entrepreneurship in the economy?r.edu/courses/97574/quizzes/357143/take ch results - yaz... Question 23 Consider the following probability distribution. xi 0 M Question Mode: M... 1 2 3 O 2.5 0.9 O 1.9 P(X = xi) O 1.5 0.1 The expected value is 0.2 0.4 0.3 Question 24 An analyst has constructed the following probability distribution for firm X's predicted return for upcoming year.