Suppose you have some money to invest-for simplicity, $1-and you are planning to put a fraction w into a stock market mutual fund and the rest, 1 w, into a bond mutual fund. Suppose that $1 invested in a stock fund yields Rs after 1 year and that $1 invested in a bond fund yields R., suppose that R, is random with mean 0.08 (8%) and standard deviation 0.07, and suppose that R, is random with mean 0.05 (5%) and standard deviation 0.04. The correlation between R and R, is 0.25 If you place a fraction w of your money in the stock fund and the rest, 1 - w, in the bond fund, then the return on your investment is R=wRs +(1-w)RD Suppose that w=0.5. Compute the mean and standard deviation of R The mean is (Round your response to three decimal places.) The standard deviation is (Round your response to three decimal places)
Q: Distinguish between an inferior good and a normal good. Is a good which is inferior for one consumer…
A: Introduction Normal Goods : The consumption of things classified as 'normal' rises as income does.…
Q: #3
A: Tax is the amount that is charged by the government from an individual or an organization on their…
Q: 7. "We are fast approaching the stage of the ultimate inversion: the stage where the government is…
A: A government is a corporate body with the power to enact social standards within a certain…
Q: good 1 good 2 country A 1 2 country B 8 40 For which good does country A have a comparative…
A: Meaning of Comparative Advantage: The term comparative advantage for any economy arises when a…
Q: Doesn't the demand curve shift as well?
A: When there is an increase or decrease in the demand for labor due to some reason other than the…
Q: Two plans are available for a company to obtain automobiles for its salesmen. Plan A: Lease the cars…
A: EUAC = NPV / A (r,t) Wherein ; NPV = Net present Value of the project A (t,r) =…
Q: increase.
A:
Q: Sven makes rocking chairs for a cost of $75 each, and he sells the rocking chairs for a market price…
A: The government uses price controls to exert direct influence over market prices. It has an impact on…
Q: Which of the following statement is correct? A. Wants, needs and demand are essentially simply…
A: Meaning of Economics: The term economics refers to the situation under which there remain…
Q: If price is $25 when the price elasticity of demand is -0.5, then marginal revenue must be: $25.…
A:
Q: 1 Economists sometimes looks at prime aged labor force participation because it is relatively…
A: Disclaimer- “Since you have asked multiple question, we will solve the first question for you as per…
Q: Menges developed the following econometric model for the West German economy*: Yt = β0 + β1Yt−1 +…
A: * ANSWER :- Given that,
Q: Which term refers to a legally established maximum price that firms may charge? A a price ceiling B…
A: Price floor is a minimum price at which a seller can sell a commodity. Subsidy is the amount of…
Q: evaluate different approaches to conducting an external environmental analysis
A: The practice of identifying every internal and external factor that might have an impact on an…
Q: Explain the difference between absolute advantage and comparative advantage. Which is the basis for…
A: Absolute advantage alludes to the a firm's, individual or a country's capacity to create a more…
Q: Evaluate how demand and supply in Jamaica affect and determine the country's foreign exchange rate.…
A: We need to check that how the demand and supply in Jamaica will affect the value of its currency…
Q: Consider the previous graph. Suppose that the price of a sedan increases from $20,000 to $25,000.…
A: Supply curve of a product depicts the direct relationship between price and quantity supplied,…
Q: ALL of them please.
A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: In the AS-AD model, at a given price level, a decrease in the expected price level shifts: the…
A: In the short run, the change in expected price would make the producer change the aggregate supply…
Q: do you think countries with distinctively different cultural, historical, and economic histories can…
A: A growing emphasis on regional integration and the creation of diverse trade blocs that support free…
Q: Jamaica currently uses a managed floating exchange rate regime. If the central bank were to increase…
A: Managed Floating exchange rate regime is the one in which the exchange rate of the country is…
Q: CHOICES: a. Both statements are TRUE b. 1st statement is TRUE, 2nd is FALSE c. Both statements are…
A: Meaning of Agriculture Economics: Here, the term agriculture economics is all about allocating and…
Q: Bryan is evaluating the pros and cons of taking economics virtually or in person. If he takes…
A: Opportunity cost can be defined as the potential benefits that is given up by an individual or a…
Q: Below table shows the production possibilities for the country of Emilon: Rice Beef A e 30 B 30 27 C…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Mexico and Brazil have very different trading patterns. While Mexico trades mainly with United…
A: The terms of trade are defined as the ratio of the index of export prices to the index of import…
Q: If domestic interest rate is higher than foreign countries interest rates, then there will be…
A: Balance of payment records the monetary transaction which are inflow and outflow of foreign exchange…
Q: 12. Assume that the consumption function is given by C=200+ 0.7 (Y-7), the tax function is given by…
A: Given information: Y = 50K0.5L0.5 -----------> Production function C = 200 + 0.7(Y-T)…
Q: The following table shows the annual demand and supply in the market for shoes in Miami. Price…
A: A demand schedule is a table that lists the price of goods and the quantity demanded at those…
Q: Task 3: The population of the Republic of Butters is 165. Of these 165 individuals, 130 are in the…
A: The labor force is the sum of unemployed and employed people i.e., Labor force = Unemployed +…
Q: those two points. Is this demand elastic or inelastic? Barron used to make $2,500 a month and eat…
A:
Q: What type of cost is the tuition paid for college credit after the census date when a refund is no…
A: There are different types of cost, fixed cost, variable cost, opportunity cost.
Q: Figure 4-2 ↑Price 10 9 + 8 Panel 1 Demand 12 3 4 Demand 1 7 8 Quantity 10 9 8 ↑ Price 1 2 Panel 2…
A: The demand curve only shifts when there is a change in any non-price factor.
Q: Question 1 What are likely to be the effects on the DEMAND for leather if there is: a) A rise in the…
A: "Since you have asked a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Suppose that the annual federal deficit is $350 billion. Gross Domestic Product 'GDP', a measure of…
A: Federal Deficit = 350 billion GDP = 14,500 billion
Q: 47. It serves as the national coordinating institution for voluntary standardization in United…
A: The standardisation infrastructure in the United States are rooted firmly in the history of America.…
Q: can u solve d and e
A: Unemployment is an expression alluding to people who are employable and effectively looking for a…
Q: Imagine you have a movie streaming platform that offers new movies at the time of release. Your…
A: Marginal utility is the additional utility derived from consuming an additional unit of the good.
Q: Assume the following is the Budget Equation for a consumer: 366 Coke + 74 Cheetos = 3556 What is the…
A:
Q: Two firms compete in selling homogeneous goods. They choose their output levels q1 and q2…
A: We are given: P = 80 - 6Q (Demand function) where Q = q1 + q2C1 = 8q1 , C2 = 32q2 + 2/3 MC1 =…
Q: If you want an investment to double in3 years, what interest rate must it earn? (Hint: Solve for the…
A: When talking about doubling of an investment it can be said that it can be done easily using…
Q: Splitting the value chain refers to O large corporations participating in different industries. the…
A: Kinds of trade Domestic trade. Wholesale trade. Retail trade. Foreign trade. Import trade. Export…
Q: How long will it take money to double itself if invested at 10% compounded annually?
A: Compound interest formula: F = P (1 + r)n Where F is the future value P is principal value r is…
Q: Kathy Hansen has a revolving credit account. The finance charge is calculated on the previous…
A: When a repayment is made, the credit balance in the account is decreased. Additionally, the balances…
Q: This graph shows the short-run aggregate supply curve (SRAS) of a hypothetical economy where the…
A: Nominal Gross Domestic Product (Nominal GDP) is the aggregate market value of all goods and services…
Q: The table below contains the price indexes for the macro economy for several years. Price Index…
A: The inflation rate implies the rate at which inflation is rising over a particular period. This rate…
Q: 1960 South Korea Mexico 2012 South Korea Mexico Population, total (in millions) 25 38.7 50 120.8 GDP…
A: GDP refers to a monetary measure of the market value of all the final products and services…
Q: production function is q = f(L, K), where q is output, L is workers, and K is the fixed number of…
A: Average productivity of labour = Output/Labour = q/L Marginal productivity of labour = MPL = dq/dL
Q: Choose the option correct
A: We know that In the long run, money is neutral refers to the fact that a change in the money supply…
Q: Use the Sales information above to answer this question. The Yaster research department established…
A: We have given the price-demand relationship as p(x)=57-1.14x ..... (1) The supply…
Q: Please help me connect the transformation of aswang in the views of Karl Marx, Durkheim, and weber.…
A: The foundation of schools of social work, often known as classic sociological theory, was built by…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- You are considering a $500,000 investment in the fast-food industry and have narrowed your choice to either a McDonald’s or a Penn Station East Coast Subs franchise. McDonald’s indicates that, based on the location where you are proposing to open a new restaurant, there is a 25 percent probability that aggregate 10-year profits (net of the initial investment) will be $16 million, a 50 percent probability that profits will be $8 million, and a 25 percent probability that profits will be −$1.6 million. The aggregate 10-year profit projections (net of the initial investment) for a Penn Station East Coast Subs franchise is $48 million with a 2.5 percent probability, $8 million with a 95 percent probability, and −$48 million with a 2.5 percent probability. Considering both the risk and expected profitability of these two investment opportunities, which is the better investment? Explain carefully.In any year, the weather can inflict storm damage to a home. From year to year, thedamage is random. Let Y denote the dollar value of damage in any given year.Suppose that in 95% of the years Y = 0, but in 5% of the years Y = 20,000.a. What is the mean of the damage in any year?b. What is the standard deviation of the damage in any year?c. Consider an “insurance pool” of 100 people who homes are sufficientlydispersed so that, in any year, the damage to different homes can be viewed asindependently distributed random variables. What is the probability that ?exceeds $2000?You plan to invest $1,000 in a corporate bond fund or in a common stock fund. The following table represents the annual return (per $1,000) of each of these investments under various economic conditions and the probability that each of those economic conditions will occur. Compute the expected return for the corporate bond and for the common stock fund. Show your calculations on excel for expected returns. Compute the standard deviation for the corporate bond fund and for the common stock fund. Would you invest in the corporate bond fund or the common stock fund? Explain. If choose to invest in the common stock fund and in (c), what do you think about the possibility of losing $999 of every $1,000 invested if there is depression. Explain.
- (Ch 7) Suppose a standard normal random variable has an 80 percent chance falling in an interval (–z, z). The value of z is approximately ____ (use Appendix C-1). a. 1.45 b. 1.35 c. 1.96 d. 1.28Y = 1million + 56.43*X + error By how much does the expected value of Y change if X increases by 2 units? (Round your answer to two decimal places: ex: 123.45) Y = 50 + 3X + error By how much does the expected value of Y change if X decreases by 10 units?Y = 30 - 25X + error What is the expected value of Y when X is 0? Y = 10 + 13.57*X + error By how much does the expected value of Y change if X increases by 18.02 units? (Round your answer to two decimal places: ex: 123.45)
- 1. Consider a position consisting of a K200,000 investment in Asset A and a K300,000 investment in Asset B. Assume that the daily volatilities of the assets are 1.5% and 1.8% respectively, and that the coefficient of correlation between their returns is 0.4. What is the five day 95% Value at Risk (VaR) for the portfolio (95% confidence level represents 1.65 standard deviations on the left side of a normal distribution)?A drug company is considering investing $100 million today to bring a weight loss pill to the market. At the end of one year, the firm will know the payoff; there is a 0.50 probability that the pill will sell at a high price and generate $37 million per year of profit forever and a 0.50 probability that the pill will sell at a low price and generate $I million per year of profit forever. The interest rate is 10%. Suppose the firm decides to wait one year to determine whether the pill will sell at a high or low price. The firm will not invest if it learns that the pill will sell at a low price. What is the net present value of waiting one year to make the investment?O $88 millionO$122.72 millionO $201.22 millionO $64.5 millionQUESTION 1 Elizabeth has decided to form a portfolio by putting 30% of her money into stock 1 and 70% into stock 2. She assumes that the expected returns will be 10% and 18%, respectively, and that the standard deviations will be 15% and 24%, respectively. Compute the standard deviation of the returns on the portfolio assuming that the two stocks' returns are uncorrelated. 17.4%. 27.4%. 7.4%. 11.4%. QUESTION 2 Elizabeth has decided to form a portfolio by putting 30% of her money into stock 1 and 70% into stock 2. She assumes that the expected returns will be 10% and 18%, respectively, and that the standard deviations will be 15% and 24%, respectively. Describe what happens to the standard deviation of the portfolio returns when the coefficient of correlation ρ decreases. The standard deviation of the portfolio returns decreases as the coefficient of correlation decreases. The standard deviation of the portfolio returns increases as the coefficient…
- You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your current Salary. You look into opening a small grocery store. Suppose that the store has annual cost of $150,000 for labor, $60,000 for rent and $30,000 for equipment. There is one-half probability that revenues will be $20,000 and a half probability that revenue will be $420,000 a. WHat is your accounting and economic profit? b. Will you quit your job and try your hand at being an entrepreneur? c. Suppose the government imposes a 25 percent tax on accounting profits: this tax is only levied if a firm is earning positive accounting profits. What will your after tax accounting profit be in the low revenue case?Q5 - Summary statistics for returns on two stocks X and Y are listed below. Mean VarianceStock X 2.85% 0.005000Stock Y 5.91% 0.006000 The covariance of returns on stocks X and Y is 0.002800. Consider a portfolio of 30% stock X and 70% stock Y. What is the variance of portfolio returns?Please round your answer to six decimal places. Note that the correct answer will be evaluated based on the full-precision result you would obtain using Excel.Suppose Caroline is choosing how to allocate her portfolio between two asset classes: risk-free government bonds and a risky group of diversified stocks. The following table shows the risk and return associated with different combinations of stocks and bonds.CombinationFraction of Portfolio in Diversified StocksAverage Annual ReturnStandard Deviation of Portfolio Return (Risk)(Percent)(Percent)(Percent)A 0 1.50 0B 25 3.00 5C 50 4.50 10D 75 6.00 15E 100 7.50 20There is a relationship between the risk of Caroline's portfolio and its average annual return.Suppose Caroline currently allocates 75% of her portfolio to a diversified group of stocks and 25% of her portfolio to risk-free bonds; that is, she chooses combination D. She wants to reduce the level of risk associated with her portfolio from a standard deviation of 15 to a standard deviation of 5. In order to do so, she must do which of the following? Check all that apply. Sell some of her stocks and use the proceeds to purchase…