Risky Prospect Y is defined as: Y = ($7,0.25 ; $12,0.50; $25,0.25) What is the expected value of prospect Y? (Do not include a dollar sign in your answer)
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- A wheel of fortune in a gambling casino has 54 different slots in which the wheel pointer can stop. Four of the 54 slots contain the number 9. For $3 bet on hitting a 9, if he or she succeeds, the gambler wins $16 plus return of the $3 bet. What is the expected value of this gambling game? (Present your answer in dollars with 2 decimal places but without $ sign)Prospect Y = ($9, 0.25 ; $137, 0.75) What is the expected value of Prospect Y? (Note: The answer may not be a whole number; please round to the nearest hundredth) (Note: The numbers may change between questions, so read carefully)Consider an investment that pays off $700 or $1,600 per $1,000 invested with equal probability. Suppose you have $1,000 but are willing to borrow to increase your expected return. What would happen to the expected value and standard deviation of the investment if you borrowed an additional $1,000 and invested a total of $2,000? What if you borrowed $2,000 to invest a total of $3,000? Instructions: Fill in the table below to answer the questions above. Enter your responses as whole numbers and enter percentage values as percentages not decimals (.e., 20% not 0.20). Enter a negative sign (-) to indicate a negative number if necessary. Invest $1,000 Invest $2,000 Invest $3,000 Expected Value Percent Increase Standard Deviation 1150 S 28 % $ 8 % $ Expected Return N/A Doubled Tripled : #
- The prizes that can be one and a sweepstakes are listed below together with the chances of winning each one: $5900(1 chance in 8600); $2700(1 chance in 5000);$600(1 chance in 4800);$200(1chance in 2500). Find the expected value of the amount won for one entry if the cost of entering is 52 centsProspect X = ($4, 0.04 ; $15, 0.05 ; $24, 0.01 ; $38, p) What is the expected value of prospect X? (Hint 1: To answer this question, you'll need to first determine the value of "p"). (Hint 2: To determine "p", remember that probabilities sum to 1). (Note: The answer may not be a whole number; please round to the nearest hundredth) (Note: The numbers may change between questions, so read carefully)Buying and selling prices for risky investments obviously are related to certain equivalents. This problem, however, shows that the prices depend on exactly what is owned in the first place. Suppose that your utility for wealth (A) can be represented by the utility function u(A) = In [(A)] You currently have R1000 in cash. A business deal of interest to you yields a reward of R100 with probability 0,5 and RO with probability 0,5. 2.1 If you own this business deal in addition to the R1000, what is the smallest amount for which you would sell the deal? 2.2 Suppose you do not own the deal. Formulate an appropriate equation and solve with algebra to find the largest amount you would be willing to pay for the deal. 2.3 Explain why the amounts in 2.1 and 2.2 are slightly different.
- 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.Tasha is planning to invest in a farming project in 2022, but has a reservation given the different forecast (declined (D),the average (A) and takeoff (T)of the economy. She uses the following to guide her decision making. (i) there is 25% chance she will invest if there is a forecast of declined (ii) there is a 75% chance she will invest if there is a forecast of average growth and (iii) there is a 55% chance of investing if there is a forecast that economy will takeoff. Tashanna believes that for 2022 there is a 20% chance of decline and a 40% chance of average growth and a 40% chance the economy will take off. Based on these probabilities what is the chance that Tattiana will invest in the farming project if the stated forecast hold?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)
- Question One. The ABC Book Company has a choice of publishing one of two books on the subject of Greek mythology. It expects the sales period for each to be extremely short, and it estimates profit probabilities as follows: Probability 0.2 0.3 0.3 0.2 Book A Profit Class Exercise $2,000 2,300 2,600 : 2,900 Probability 0.1 0.4 0.4 0.1 Book B Profit $1,500 1,700 1,900 2,100 Calculate the expected profit, standard deviation, and coefficient of variation for each of the two books. If you were asked which of the two to publish, what would be your advice?Portfolio ABZ has a daily expected return of 0.0634% and a daily standard deviation of 1.1213%. Assuming that the daily 5 percent parametric VaR is $6 million, calculate the annual 5 percent parametric VaR for a portfolio with a market value of $ 120 million. (Assume 250 trading days in a year and give your answer in Dollars)You are at a casino and there are three slot machines you can use to bet on. You must have a return of .5% of higher on what you are betting. Below is the expected returns for each slot machine under various scenarios. What combination of machines do you play to maximize your average return? Decision Variables Data Slot 1 100.0% Monday Tuesday Wednesda Average Slot 2 0.0% Slot #1 8% 4% 5% 5.667% Slot 3 0.0% Slot #2 2% -3% 3% 0.667% Slot #3 6% -2% 4% 2.667% Objective 5.7% Constraints 0.08 >= 0.5% 0.04 >= 0.5% 0.05 >= 0.5% 100.0% .: 100%
