1920 19. Adaptive expectation can be sometimes accurate but rational expectationA. may not beaccurate.B. must not beČ. must beD. is once and for all(mr) for major commercial banks by 0.25-0.5 percentage points,20. The People's Bank of China cut thereleasing a few hundred billion worth of long-term liquidity into the interbank system last month.A. required rate of retumC. required reserve ratioB. required revenue reserveD. required ratio of research

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MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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In a market in which the Arbitrage Pricing Theory (APT) model holds, the expected return is given by E[R].
A forward contract exists for a unit of two-year government securities with delivery to take place three years from now. Suppose the price of these securities three years from now is uniformly distributed from a low $800 to a high of $1,400. The one-year expected riskless rate of interest is 5 percent for all periods under consideration. If investors are risk neutral, what should be the current forward price? Suppose now that investors are risk averse and that the forward price is $1,200. What do you know about the relationship between the market value of two-year government securities and overall consumption? Continue to assume (as in (ii)) that the current forward price (at time 0) is $1,200. One year from now (at time 1) the forward price for the same item and same delivery date is $1,000. Determine the time 1 value (to the buyer) of the contract that was agreed upon at time 0.
If the expected return on the market is 8% and the risk free rate is 4% and the expected return is 12%, what is the market risk premium ?
Suppose that spot and futures prices of the underlying asset when hedge is initiated are $3.10 and $2.50 respectively, and when hedge is closed out are $2.90 and $2.80 respectively. 1. What is the meaning of above numbers? 2. What is the basis risk when hedge is initiated? 3. What is the basis risk when hedge is closed out? 4. Is it a perfect hedge? 5. What will be the effective price received (paid) for the hedging asset? (S₂ + F₁-F₂
Use the following two tables to answer questions a. - e. a. Which of the above securities cannot lie on the efficient frontier? b. Why might you nonetheless include it in your portfolio? c. What is the expected return for a portfolio comprised of 40% security B and 60% security C? d. What is the standard deviation for a portfolio comprised of 40% security B and 60% security C? e. Suppose a risk-free asset with a yield of 3% exists, but only for lending. Would the highly risk-averse investor's optimal portfolio be likely to contain asset C? Why or why not?
Consider two people age 40. What is the expected number of years that both are alive? What is the expected number of years that at least one is alive? Show your work in excel to solve the following: What is the actuarial present value of a pension that pays $50,000 per year as long as at least one of the two 40-year-old people survive? Use a 5% discount rate. [Remember actuarial present value means that you must discount in the usual way to get present value, but you also must weight (i.e., multiply) every yearly payment by the probability that at least one of the two 40-year-old people is alive in order to receive the $50,000 payment.]
Federated South Insurance Company has developed a new screening program for selecting new sales agents. Their past experience indicates that 20% of the new agents hired fail to produce the minimum sales in their first year and are dismissed. Their expectation is that this new screening program will reduce the percentage of failed new agents to 15% or less. If that occurs, they would save $1,000,000 in recruiting and training costs each year. At the end of the first year they want to develop an evaluation to determine if the new program is successful. The following questions are an important part of their research design.A total of 20 new agents were selected.a. If this group performs at the same level as past groups, what is the probability 17 or more successfully meet their minimum sales goals in the first year?b. What is the probability 19 or more reach their minimum sales goals given performance at the same level?c. If the program has actually increased the probability of success to…
Suppose that 2% of the employed lose their job each month. Further suppose that 25% of the unemployed find a job each month. a. What is the average duration of employment in this labor market? b. Do you think this is a reasonable figure given estimates of the natural rate? Why or why not? c. If you wanted to reduce the steady-state level of unemployment, what type of policies might you pursue and why?
A company estimates that 0.3% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $150.If they offer a 2 year extended warranty for $23, what is the company's expected value of each warranty sold?
Suppose that a life insurance company insures 900,000 fifty-year-old people in a given year. (Assume a death rate of 8 per 1000 people.) The cost of the premium is $500 per year, and the death benefit is $45,000. What is the expected profit or loss for the insurance company?
Suppose that a life insurance company insures 1 million 50-year-old people in a given year. (Assume a death rate of 5 per 1000 people.) The cost of the premium is $200 per year, and the death benefit is $50,000 What is the expected profit or loss for the insurance company?
Determine a casino's expected net income from a 24-hour period at a single roulette table if the casino's total overhead for the table is $50 per hour and if customers place a total of $5,000 on single-number bets, $4,000 on two-number bets, $4,000 on four-number bets, $2,000 on six-number bets, $7,000 on low-number bets, and $8,000 on red-number bets. (Assume the expected value of each of these $1 bets in roulette is −$0.053.)

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19. Adaptive expectation can be sometimes accurate but rational expectation A. may not be accurate. D. is once and for all B. must not be C. must be