An analyst has predicted the following returns for Stock A and Stock B in three possible states of the economy.Probability0.3StateAВBoom0.150.250.100.020.200.01Normal0.5Recessiona. What is the probability of a recession? (Round your answer to 2 decimal places.)Probabilityb. Calculate the expected return for Stock A and Stock B. (Round your answers to 1 decimal place.)Expected ReturnStocks A%Stocks B%c. Calculate the expected return for a portfolio that is invested 55% in A and 45% in B. (Round your answer to 2 decimal places.)Expected return%

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Answered: An analyst has predicted the following…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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1. ABC inc. stock is currently selling for $30, one year from today the stock price can either increase by 20% or decrease by 15%. The probability of an increase in the stock price is equal to 0.3. The one-year risk-free rate is 5% What is the value of a European put that expires in one year with an exercise price of $24. 2. Graphically, show the value and the profit and loss of the following butterfly position: Long in a call with an exercise price of $30, short in 2 calls with an exercise price of $45, and long in a call with an exercise price of 60. All calls are written on the same stock and have the same maturity. 3. "Early exercise of an American option on a stock that does not pay any dividend is not optimal regardless of whether the option is a Call or a Put". True, False, or Uncertain. Explain.
In exercise 37,find the expected net gain to the player for one play of the game.If x is the net gain toa player in a game of chance,then E(x)is usually negative.This value gives the average amount per game the player can expect to lose. 38.A charity organization is selling $5 raffle tickets as part of a fund-raising program.The first prize is a trip to Mexico valued at $3450,and the second prize is a weekend spa package valued at $750. The remaining 20 prizes are $25 gas cards. The number of tickets sold is 6000.
A certain model phone costs $599. The probability of the phone breaking over the course of a year is .07. What is the maximum amount you could pay for phone replacement insurance and still have a non-negative expected value on the policy? In other words, for what price or below would it be worth it to get the insurance?
28 The probability that a 50-year-old man will survive a fixed length of time is 0.995. An insurance company will sell him a $20,000 life insurance policy for this length of time for a premium of $200. What is the expected gain for the insurance company? * $200 $100 $250 $150
You are given the following probability distribution for the returns on Security A and Security B: Probability 0.3 0.3 0.3 0.1 Return on Security A 37% 7% 20% -15% Return on Security B 13% 19% 26% -22% Assume you invest $4,000 in Security A and $6,000 in Security B. What are the expected return and standard deviation of your portfolio?
solve a and b fast
You buy a stock that has an annual expected return of 20% and a standard deviation of 25%. Last year, investors in the stock lost 32.5% of their money and the year before they gained 40%. What is the probability that the outcome on this stock will be better than -32.5%, but less than +40% this year? a 18.75% b. 52.50% c. 78.82% d. 22.97% e. 77.03%
A certain portfolio’s value increases by 30% during a financial boom, increases by 5% during normal times and it decreases by 2% during a recession. Suppose each scenario is equally likely and you invested $200 in this portfolio. . 1.Create a probability model for your net gain. 2.What is the expected net gain when you invest $200 in this portfolio? 3.What’s the standard deviation of your net gain when you invest $200 in this portfolio?
Q3
11.8.3 The table shows claims and their probabilities for an insurance company. Use the table to answer parts a through c. Amount of claim (to the nearest $50,000) Probability $0 0.65 $50,000 0.23 $100,000 0.05 $150,000 0.04 $200,000 0.02 $250,000 0.01 a.Calculate the expected value. $_______
The principle of redundancy is used when system reliability is improved through redundant or backup components. Assume that a student's alarm clock has a 16.9% daily failure rate. Complete parts (a) through (d) below. a. What is the probability that the student's alarm clock will not work on the morning of an important final exam? (Round to three decimal places as needed.) Enter your answer in the answer box and then click Check Answer. Check Answer parts remaining Clear All
Еxample 4 The daily discharge of a river can be modeled using log-normal distribution with a mean of 1300 m/sec with a standard deviation of 500 m/sec. a. What is the probability that the discharge shall exceed 2000 m³/sec. b. What is the probability that the discharge shall exceed 1300 m³/sec. c. What is the conditional probability that the discharge is less than 2000 m/sec given it is more than the mean 1300 m/sec. d. If a bank is to be made across the river to avoid flooding with the design daily discharge that shall be exceeded once in 10 years. Calculate the design daily discharge

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