ProblemSet1 Solutions v1 Essay

during 1979 at a total cost of $74 million and an average price of $15.16 in the belief that they were

You recently purchased a stock that is expected to earn 12% in a booming economy, 8% in a normal economy and lose 5% in a recessionary economy. There is a 15% probability of a boom, a 75% chance of a normal economy, and a 10% chance of a recession. What is your expected rate of return on this stock?

B. Graph AFC, AVC, ATC, and MC. Explain the law of diminishing returns influences the derivation and shape of each of these four curves and their relationships to one another. Specifically, explain non-technical terms why the MC curve intersects both the AVC and ATC curves at their minimum points. Attach a graph to the sheet.

Which database did you use to find the bill and why did you choose that particular one?

I would use a bar graph because it would be easy to follow and understand the information presented.

1.2. Earned its first profit in 1981- $39.2m on revenues of $4.2bn. Privatised through an IPO in 1987

Answer = A line graph will be appropriate because it supports the hypothesis because it provides clear results.

This source has given me most of my data and arguing facts. It shows a lot of graphical analysis. It also gives data to the exact decimal, which is really trustworthy.

2. Beatriz is creating graphs for her city’s Parks Department. Beatriz is trying to persuade the Parks Department to put in more gazebos for shade. For a local park, Beatriz wants to demonstrate the attendance as it changes every week. She also wants to show the temperature changes per month. Sometimes temperatures reach below zero. Explain to Beatriz how to make the graphs correctly based on the data that she will collect and what labels, scales, and intervals each axis must have on each graph. Use complete sentences and support your reasoning. Feel free to generate sample data to help support your response.

Simpson’s Paradox. The next 6 parts provide a refresher on topics of graphing and describing data that you

Knowing this information, you need to first tell me, and then show this in your graph:

a) Here we have the expected return and beta for two assets. We can express the returns of the two assets using CAPM. If the CAPM is true, then the security market line holds as well, which means all assets have the same risk premium. Setting the reward-to-risk ratios of the assets equal to each other and solving for the risk-free rate, we find:

prior year. (See Exhibit 1 for GE financials, 1996–2006.) By the end of 2002, GE’s stock was trading at

 Oct 2011 Snapshot# of SFH listed-31Cancellations or withdrawls-2Short Sales/REOs-1Highest priced SFH-$1,849,318Lowest priced SFH-$594,500Average SFH characteristics-

Then we noticed that in exhibit 4, the period of historical data is from 1992-1996. However , the stock of Waterhouse Investor Srvcs only last to Sep 1996, in order to compare the data in the same time horizon, we select the period of 5 years, started from Sep 1991 to Sep 1996.