Dash and Lily Corporation wanted to raise funds for the poor. The first prize for a raffle is P500,000 (with a probability of 0.001) and the second prize is P250,000 (with a probability of 0.003). What is a fair price to pay for a single ticket in this raffle?

Dash and Lily Corporation wanted to raise funds for the poor. The first prize for a raffle is P500,000 (with a probability of 0.001) and the second prize is P250,000 (with a probability of 0.003). What is a fair price to pay for a single ticket in this raffle?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter4: Gross Income: Concepts And Inclusions

Section: Chapter Questions

Problem 53P

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Concept explainers

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.

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Dash and Lily Corporation wanted to raise funds for the poor. The first prize
for a raffle is P500,000 (with a probability of 0.001) and the second prize is P250,000 (with a probability of 0.003). What is a fair price to pay for a single ticket in this raffle?

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I. Pielago is in need of funds for the next 3 months. She badly needed P30,000,000 in cash because of an emergency. Pielago looked for the list of her family’s property and found a land which costs P50,000,000 and has a fair market value of P65,000,000. What do you think is the best money market security that suits Pielago’s case? II. If Pielago on the other hand is not a user of the fund but a surplus unit, what do you think is the most suitable money market security she must invest in, considering the fact that she has P55 Trillion excess funds.