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- Q2. In some investment company the manager is preparing to call on a potential new client. The manager wants to convince the new client to invest in mutual funds managed by his com- pany. Before making the presentation, the manager lists four possible investment outcomes and his subjectively assessed probabilities related to the sales prospect as follows: Outcome P(Outcome) $0 $1500 0.8 0.1 $4000 0.03 $15000 0.07 E= 1.00 %3D What is the probability of obtaining more than $0?A investment company has an asset A that will produce a cash flow of $5.500 with prob. 0.3 and $8,800 with prob. 0.7. They also own an asset B that pays $1,550 with prob. 0.5 and $3.500 with prob. 0.50. In this case, the probability that the company will earn a total payoff of $10,350 from their portfolio of assets is and the expected value of this portfolio is_ O a15: $10.335 O 0.15: $10885 O 035: $1088S O 035, $10.33sTobacco is shipped from North Carolina to acigarette manufacturer in Cambodia once a year. The reorderpoint, without safety stock, is 200 kilos. The carrying cost is$15 per kilo per year, and the cost of a stockout is $70 per kiloper year. Given the following demand probabilities during thelead time, how much safety stock should be carried?
- Find the expected value of the trader's profit.6.) Investment Club. The triple L investment club is considering purchasing a certain stock. After considerable research, the club members determine that there is a 60% chance of making $10,000, a 10% chance of breaking even, and a 30% chance of losing $7200. Determine the expectation of this purchase.Suppose a world has two risky assets: HotPot and IceCream. The following table shows the holding period returns in each scenario. Suppose the T-bill rate is 5%. Scenario Probability Return (HotPot) Return (IceCream) Rainy 0.02 10% -5% Snowy 0.03 15% -15% Windy 0.9 10% 8% Sunny 0.05 -10% 25% Which answer is the closest value to the fifth-percentile value at risk (VaR) of holding IceCream? A. -15% B. -5% C. 25% D. -10%
- Data on the 30 largest bond funds provided one-year and five-year percentage returns for theperiod ending March 31, 2000 (The Wall Street Journal, April 10, 2000). Suppose we consider aone-year return in excess of 2% to be high and a five-year return in excess of 44% to be high.One-half of the funds had a one-year return in excess of 2%, 12 of the funds had a five-yearreturn in excess of 44%, and six of the funds had both a one-year return in excess of 2% and afive-year return in excess of 44%.a. Find the probability of a fund having a high one-year return, the probability of a fundhaving a high five-year return, and the probability of a fund having both a high one-yearreturn and a high five-year return.b. What is the probability that a fund had a high one-year return or a high five-year returnor both?c. What is the probability that a fund had neither a high one-year return nor a high fiveyear return?The triple L investment club is considering purchasing a certain stock. After considerable research the club members determine that there is a 50% chance of making $9000, a 20% chance of breaking even, and a 30% chance of losing $6600. Find the expectation of this purchase.At Oriole Company, events and transactions during 2020 included the following. The tax rate for all items is 40%.(1) Depreciation for 2018 was found to be understated by $ 151000.(2) A strike by the employees of a supplier resulted in a loss of $ 125100.(3) The inventory at December 31, 2018 was overstated by $ 201000.The effect of these events and transactions on 2020 income from continuing operations net of tax would be
- The Triple L investment club is considering purchasing a certain stock. After considerable research, the club members determine that there is a 50% chance of making $9,000, a 10% chance of breaking even, and a 40 chance of losing $7,500. Find the expectation of this purchase.c63. A fund manager is considering investment in the equity shares of one of two companies. The criterion for selecting the company for investment is consistency of return on net worth. The following data have been collected: Financial Return on Networth (%) Year Modern Industries Pioneer Industries Ltd. (PIL) Ltd. (MIL) 2010-2011 19 20 2009-2010 20 24 2008-2009 16 16 2007-2008 13 15 2006-2007 12 10 You are required to identify the company in which the fund manager should invest."The recent economic downturn resulted in the loss of jobs and an increase in delinquentloans for housing. In projecting where the real estate market was headed in the comingyear, economists studied the relationship between the jobless rate and the percentage ofdelinquent loans. The expectation was that if the jobless rate continued to increase, therewould also be an increase in the percentage of delinquent loans. The following data showthe jobless rate and the delinquent loan percentage for 27 major real estate markets. a. Compute the correlation coefficient. Is there a positive correlation between the joblessrate and the percentage of delinquent housing loans? What is your interpretation?b. Show a scatter diagram of the relationship between the jobless rate and the percentage