You have determined that your risk tolerance is 250. Calculate your utility for the following payoffs: (Round your answers to 2 decimal places.) Payoff Utility 28 50 125
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- Suppose a risk-neutral power plant needs 10,000 tons of coal for itsoperations next month. It is uncertain about the future price of coal. Theprice of coal today is $60 a ton but next month it could be either $40 or$68 (with equal probability). How much would the power plant be willingto pay today for an option to buy a ton of coal next month at today’sprice? (Ignore discounting over the short period of a month.)According to the Institute of Internal Auditors, risk is a combination of the probability of an event and its consequence and that consequences can range from positive to negative True or False?How do I get the 0.20 for probability in excel?
- if you are the Risk Manager of Barings Futures Singapore (BFS), discuss the potential riskmitigation that you can take in order to curb the situation?Assume that you are considering the purchase of a house. What examples of each of the four types of risk mitigation that are associated with buying a house?Determine the type of risk response being described in each case.Mr. Author annually publishes a new version of his textbook. He acknowledges that some students will use the old version instead. He also understands that some students will obtain a fake copy of his book. This will like reduce his sales volume. a. Avoidanceb. Mitigationc/ AcceptanceABC Corporation does not want to be liable for transportation losses. It sells only with the terms FOB Shipping point. a. Avoidanceb. Mitigationc. AcceptanceEmployees are required to participate in the annual earthquake drill. They are reminded to keep calm to avoid stampedes. a. Avoidanceb. Mitigationc. Acceptance
- Suppose the owner of a paint factory is caught dumping toxic waste in a public landfill and is sued in a civil action under pollution laws. Assume the probability he is detected when he does this is 10 percent, and the average social cost of each violation is $200,000. Should he be liable for punitive in addition to compensatory damages? If so, for how much?Uncertainty and risk are sometimes used interchangeably, but they are not really the same, please discuss?Can a risk matrix be used to show the inherent level of the risks in time of likelihood and magnitude? Ture or False?
- A requirement for scientific work is that what we have done can be reproducible, whichmeans that when using the same input and the same models, we should arrive at the sameresults. Will a risk assessment meet this requirement? it is a risk management question.Suppose the equilibrium price for good quality used cars is $20,000. And the equilibrium price for poor quality used cars is $10,000. Assume a potential used car buyer has imperfect information as to the condition of any given used car. Assume this potential buyer believes the probability a given used car is good quality is .60 and the probability a given used car is low quality is .40. Assume the seller has perfect information on all cars in inventory. If the seller sells the buyer a good quality car, what is the net-benefit to the seller? a. A net gain of $4,000. b. A net gain of $20,000. c. A net loss of $4,000. d. A net loss of $10,000.Emma can either buy a used car or buy a new car. The used car costs $12,800 with a 40% chance she will run into mechanical problems that will cost $3500 to repair. The new car costs $17,595. Also, there is an 8% chance she will get into an accident in the next 5 years, which will cost 20% of the value of her car. If the cost of the accident is greater than $5000 she would only pay a deductible of $3000. What is the expected value of buying a new car? What is the expected value of buying a used car? Draw a probability tree.