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- **Practice** I have been trying to practcie this question but I always seem to get it wrong What is the expected final wealth of each agent? Pay attention to the names in each option!A. Anna’s expected final wealth is 1440 and Bob’s expected final wealth is 980B. Anna’s expected final wealth is 1020 and Bob’s expected final wealth is 1380C. Anna’s expected final wealth is 1460 and Bob’s expected final wealth is 1105D. Anna’s expected final wealth is 1140 and Bob’s expected final wealth is 1200E. None of the options aboveExtensions Help | Arial 1 Last edit was seconds ago 11 1 + BIUA ¹2' 3 C 田 5 6 1. What are 2 examples of variables that can have a correlation to the demand/forecast of a product your company makes? 2. What does it mean when we say we use the BOM to do an MRP MacBook Pro U = = == explosion? 3. Explain what do we call "Strategic Stock". Give an example of when this could be triggered I 7 12Assume that the economy can experience high growth, normal growth, or recession. Under these conditions, you expect the following stock market returns for the coming year: Probability State of the Economy High Growth Return 0.2 +30% Normal Growth 0.7 +12% Recession 0.1 -15% a. Compute the expected value of a $1,000 investment over the coming year. If you invest $1,000 today, how much money do you expect to have next year? What is the percentage expected rate of return? Instructions: Enter dollar values rounded to the nearest whole dollar and percentages rounded to one decimal place. The expected value is $ 1129 and the expected rate of return is 12.9 %. b. Compute the standard deviation of the percentage return over the coming year. Standard deviation 11.7 % c. If the risk-free return is 7 percent, what is the risk premium for a stock market investment? Risk premium 17.5 %
- Which of the following investment strategies involves generating a higher expected rate of return through increasing risk? Answer a. Leverage b. Value at risk c. Diversifying d. Hedging riskThere are two portfolios available: A: Get $4 for sure B: 70% gaining $10 and 30% losing $10. The expected value of A is $ The expected value of B is $ The standard deviation of A is $ The standard deviation of B is $ (enter all answers with two decimal places.) Amanda is risk neutral, she would choose portfolio О А. В. B. Not enough information to determine. C. A. O D. A or B.Banks often close Repo-Deals with other banks. Today the lower Rhine-Bank (LRB) owns a 6% CHF-fixed coupon bond which was issued by the Swiss Novartis Group and is subject of a Repo-Deal. Three months ago the bank closed the Repo-Deal which originally had a maturity of six months. 1. Please name the risk which is hedged by Repo Deal. 2. Please name two risks which are related to the above mentioned bond. 3. Select one risk of the above mentioned bond and name one means/financial instrument in order to hedge the selected risk. 4. Briefly describe the events or actions which a. Took place three months ago, b. will take place in three months.
- Suppose that there is a 45 percent change that George's coffee shop will make $10000 in profits in January and a 45 percent chance it will make 0 profits and a 10 percent chance that it will make -$1000 in profits (i.e., it will lose $1000). Calculate the coffee shop's expected profitsWhich of the following represent diversifiable risks? 1. the president of a company suddenly resigns 2. the economy goes into a recessionary period 3. a company's product is recalled for defects 4. the Federal Reserve unexpectedly changes interest rates 1, 2, and 3 only 1, 2, 3, and 4 O 2 and 4 only 1 and 3 only 1, 2, and 4 onlyAssume you can invest in 2 projects whose payoff depend on the state of the economy. The profits from each project for each state of the economy are presented below. What are the expected payoffs of each project if there is a 30% chance of a recession and a 70% of no recession? Profit under recession Profit under normal conditions Project 1 |100,000 150,000 Project 2 50,000 240,000 Project 1: $130,000 and Project 2: $180,000 O Project 1: $135,000 and Project 2: $183,000 O Project 1: $135,000 and Project 2: $180,000 O Project 1: $130,000 and Project 2: $183,000
- This refers to the premium to compensate investors for not having to convert their investments into cash. *a. None of the choicesb. Default Risk Premiumc. Liquidity Risk Premiumd. Maturity Risk Premiume. Special Characteristics PremiumSelect all of the following that are true regarding hedging: A. Hedging is risk mitigation through diversification. B. Hedging is the same as arbitirage since it acts in across markets C. Hedging increases the returns of an investment D. Buying an risky investment is an example of hedging Detailedly Explanation Please, Thank you!You expect interest rates to rise with upcoming inflation so you shorted (on margins) a US Treasury portfolio. Two weeks later war breaks out in the Middle East and there is unexpected, sustained large influx of foregin capital into the US to seek low risk safety in the Treasury market. What most likely would have happened to your portfolio invetment? You liquidated the position at a gain You keep the portfolio with signifcant loss expected You keep the portfolio with little change in value You liquidated the position at a loss