1. (a) i. ii. Explain why the following equation is an appropriate model of stock price behaviour ds µSdt + Sdz where u is the expected return for the stock and is the stock's volatility. = Demonstrate why this equation is not appropriate as a model of short-term interest rate behaviour.

( Previous Ne CAPM The Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio are normally distributed. Suppose a portfolio has an average annual return of 11.5% (i.e. an average gain of 11.5%) with a standard deviation of 38.5%. A return of 0% means the value of the portfolio doesnt change, a negative return means that the portfolio loses money, and a positive return means that the portfolio gains money. (a) What percent of years does this portfolio lose money, i.e. have a return less than 0%? (b) What percent of years does this portfolio return more than 15%? (c) What percent of years does this portfolio return between 18% and 35%? (d) What is the cutoff for the highest 40% of annual returns with this portfolio? Submit answer M US V 0 10: acer

The population of Lindsay is increasing by approximately 1.8% per year. In 2010 the population of Lindsay was 11,768 people. If 'T is the time in years and 'P' is the estimated population, what is the equation that would model the expected growth of Lindsay? O A.P = 18 (11768) O B. P = 11768 (18) OCp= 11768 (1.8) ODP = 11768 (1.018)*

An economist wants to compare the economic growth rate (%) within 50 kilometers and 100 kilometers to cities in a country. He collected 6 cities of the country, and calculated the growth rates with 50km and 100km as shown in the following table. Choose an appropriate test to validate that regions within 100km have higher economic growth rate than the regions within 50km to cities. You can make certain assumptions, but need to write to indicate your assumption. Show calculations by hand.

Please Answer 3 Sub Parts the question and no Reject.... Thank u

Compute the rate of return for investment represented by the following cash flow: (Ans.10.83%)   Year  0 1 2 3 4 5 Cash Flow -$595 $250 $200 $150 $100 $50

In May, about 451 thousand existing homes were sold in the U.S., and sales were decreasingby 3.4% per month.(a) Create a model for this situation. (Recall that you should define the independent anddependent variables and their units, as well as provide an equation.)(b) If this trend continues, how many existing homes will be sold in the U.S. in October?(Round to the nearest thousand homes.)

PLEASE HELPI WITH ALL OF THEMI Exercise 5.20 Consider the following portfolio of annuities-due currently being paid from the assets of a pension fund. Age Number of annuitants 60 40 70 30 80 10 Each annuity has an annual payment of $10000. The lives are assumed to be independent. Assume mortality follows the Standard Ultimate Life Table, with interest at 5% per year. Calculate (a) the expected present value of the total outgo on annuities, (b) the standard deviation of the present value of the total outgo on annu- ities, and (c) the 95th percentile of the distribution of the present value of the total outgo on annuities, using a Normal approximation.

The following table shows timber stumpage prices for pine pulpwood in two regions of the American South. Prices are in dollars per ton and were recorded at the start of the indicated year. Year Region 1 Region 2 2002 6.30 4.00 2005 7.50 6.70 2007 7.00 9.00 (a) For Region 2, what is the average rate of change per year in price from 2002 to 2005?(b) Use your answer to part (a) to estimate the price in Region 2 at the start of 2004. (The actual price was $6.40 per ton.)(c) For Region 1, what is the average rate of change per year in price from 2005 to 2007?(d) Use your answer to part (c) to estimate the price in Region 1 at the start of 2008.(e) For each region, find the percentage increase in price from 2002 to 2007. (Round your answers to one decimal place.) Region 1       % Region 2       % (f) On the basis of your answer to part (e), in the absence of other factors, would an investor in timber be better advised to choose Region 1 or Region 2? Region 1Region 2

You are stock price analyst for the company. You are given historical daily stock prices of your company from Day 1 to Day 700 (Assuming stock market trade daily). As- suming the stock price follows the Black-Scholes fråmework. Determine the historical annual volatility, ở of this stock. Next, estimate the expected annual rate of return &. Assuming this is non-dividend paying stock, simulate the daily stock price for the next 90 days with the estimated annual volatility, ô and expected annual rate of return, ôt. Then, simulate the daily stock price again for the next 90 days with 5%, 15%, 25% and 35% deviation of your estimated annual volatility (assuming no change in the estimated rate of return).