Concept explainers
A formula in financial analysis is:
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Business Analytics (2nd Edition)
- The following table shows data for the cost of natural gas in Maryland (in dollars per Million Btu) for x years since 1990. Year x Price in $ per Million Btu 1990 6.31 1991 6.14 1992 6.32 1993 6.75 1994 6.8 1995 6.34 1996 7.46 1997 8.12 1998 8.04 1999 8.25 2000 9.58 2001 11.28 2002 9.25 a. Predict the price in dollars per million Btu for the year 2010. Then calculate the residual for the year 2010 if the actual price in 2010 was $11.57 per million Btu. b. What is the correlation coefficient, rounded to two decimal places. Is the linear association between the variables “weak” or “strong”? How do you know?arrow_forwardThe stock market did well during the 1990s. Here are the percent total returns (change in price plus dividends paid) for the Standard & Poor's 500 stock index: Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Return –3.1 30.5 7.6 10.1 1.3 37.6 23.0 33.4 28.6 21.0 Reference: Ref 14-1 The correlation of U.S. stock returns with overseas stock returns during these years was about r = 0.4. This tells you thatarrow_forward(d) Suppose that new copies cost $150 and used copies cost $80. Assume the bookstore currently has 50 new copies and 50 used copies. What is the expected value of total revenue from the sale of the next 15 copies purchased? [Hint: Let h(X) = the revenue when X of the 15 purchasers want new copies. Express this as a linear function.] $arrow_forward
- The stock market did well during the 1990s. Here are the percent total returns (change in price plus dividends paid) for the Standard & Poor's 500 stock index: Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Return –3.1 30.5 7.6 10.1 1.3 37.6 23.0 33.4 28.6 21.0 The correlation of U.S. stock returns with overseas stock returns during these years was about r = 0.4. This tells you thatarrow_forwardThe data below show consumption of chicken and its real price at GIMPAConsumption (Y ) 3 3.15 2.34 2.70 3.4 6.3 3.3 4.2 5. 6 3.7Price ( X ) 12 14 4.8 13.9 14 .9 18.2 12 14.3 17 .2 16.1Calculate viii. Predict the monthly consumption for a student with 10 Ghana cedis.ix. Compute the standard deviation of errors.x. Construct a 90% confidence interval for B.xi. Test at the 5% significance level whether B is negative.arrow_forwardThe diversifiable risk of a portfolio:a. Is correlated with systematic risk.b. Can be made sufficiently small.c. Is zero in the real world.d. Is the risk that investors lose because of transaction costs.arrow_forward
- From the following Table of yearly premiums for policies maturing at different ages, estimate the premium for policies maturing at the age of 47 years. Age (in years) 45 50 55 60 65 Premium (in .) 287 240 208 186 171arrow_forwardThe accompanying data represent the annual rates of return of two companies' stock for the past 12 years. Complete parts (a) through (k). Year Rate of Return of Company 1 Rate of Return of Company 21996 0.203 0.3981997 0.310 0.5101998 0.267 0.4101999 0.195 0.4362000 -0.101 -0.0602001 -0.130 -0.1512002 -0.234 -0.3572003 0.264 0.3282004 0.090 0.2072005 0.030 -0.0142006 0.128 0.0932007 -0.035 0.027 (j) Plot residuals against the rate of return of Company 1. Does the residual plot confirm that the relation between the rate of return of Company 1 and Company 2 is linear? Yes or No? (k) Are there any years where the rate of return of Company 2 was unusual? Yes or No?arrow_forwardThe graph shows that: A) to attain a higher expected return the investor has to tolerate higher risk B) there is a positive linear relationship between expected return and risk C) the mean-return compensations of equal-std-increments decline as we target higher and higher risk D) answers 1 and 3 are correct E)answers 1 and 2 are correctarrow_forward
- The following table shows the average monthly production of coal in tonnes for the year 2010-2019. Year Production (in tonnes) Year Production (in tonnes) 2010 50.0 2015 38.1 2011 36.5 2016 32.6 2012 43.0 2017 41.7 2013 44.5 2018 41.1 2014 38.9 2019 33.8 Compute the price indices from 2010 to 2019 by taking 2019 as the base year. Compare the price of 2014 and 2017. What is the percentage (%) change in the production from 2016 to 2019?arrow_forwardThe Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio are normally distributed. Suppose a portfolio has an average annual return of 14.7% (i.e. an average gain of 14.7%) with a standard deviation of 33%. A return of 0% means the value of the portfolio doesn’t change, a negative return means that the portfolio loses money, and a positive return means that the portfolio gains money. What percent of years does this portfolio lose money, i.e. have a return less than 0%? What is the cutoff for the highest 15% of annual returns with this portfolio?arrow_forward( Previous Ne CAPM The Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio are normally distributed. Suppose a portfolio has an average annual return of 11.5% (i.e. an average gain of 11.5%) with a standard deviation of 38.5%. A return of 0% means the value of the portfolio doesnt change, a negative return means that the portfolio loses money, and a positive return means that the portfolio gains money. (a) What percent of years does this portfolio lose money, i.e. have a return less than 0%? (b) What percent of years does this portfolio return more than 15%? (c) What percent of years does this portfolio return between 18% and 35%? (d) What is the cutoff for the highest 40% of annual returns with this portfolio? Submit answer M US V 0 10: acerarrow_forward
- Calculus For The Life SciencesCalculusISBN:9780321964038Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.Publisher:Pearson Addison Wesley,