Problem Number 1. Mickey's InvestmentsMickey Lawson is considering investing some money that he inherited. The following payoff table gives the profits that wouldbe realized during the next year for each of three investment altematives. Mickey is considering:STATE OF NATUREGOODALTERNATIVEPOOR ECONOMYECONOMYStock Market80,000-20,000Bonds30,00020,000CDs23,00023,0001. What decision would maximize expected profits? Compute using the five criteria for decision making underuncertainty. Illustrate using decision tables for each criteria. (Coefficient of Realism a = 0.80)2. If you were the financial adviser of Mickey Lawson, what will you recommend? Why?

Decision of uncertainty are used to make decision without the probability of occurrence. There are…

Answered: Mickey Lawson is considering investing…

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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Questions a. - c. refer to the following data. You estimate a 3-factor return-generating process for 5 large portfolios with the following results. a. Which two portfolios are functional equivalents according to the Arbitrage Pricing Theory? b. What is the expected return on portfolio B? c. Suppose that the market is currently pricing portfolio E so that its expected return is 8% and pricing portfolio B so that its expected return is 10%. Describe the forces that will bring about equilibrium according to the APT.
Below pay-off was generated for your investment options. From this pay-off table determine the best decision using decision making under uncertainty: a.Maximax b.Maximin c.Minimax Payoff Table Economy Growing Stable Declining Alternatives Bonds Stocks 40 45 70 30 -13 Mutual Funds 53 45 -5
Assist the analyst to obtain the index value forecasts
Refer to the following payoff table: State of Nature Alternative S1 S2 A1 75 −40 A2 0 100 Prior Probability 0.6 0.4 There is an option of paying $100 to have research conducted to better predict which state of nature will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time. What is the posterior probability of S1 given that the research predicts S1? Multiple Choice: 0.18 0.82 0.57 0.44 0.65
Example 14: The net profit (after taxes) of a firm is 75,000 and its preference dividend is 710,000. Calculara dividend coverage ratio.
You are considering purchasing a carpet cleaning business that will cost $40,000 for startup. Being a detail-oriented entrepreneur, you have looked into the performance of other franchises for this company and have found the following. 35% of the franchises close after one year with a net loss of $48,000. 30% of the franchises continue to operate but have a net profit of only $24,000. 35% of the franchises are doing quite well with a net profit of $100,000 in their first year. If you are only concerned with the first year’s outcomes, what Is the expected value of the franchise?
Please explain both part of the question! DO NOT USE EXCEL!
An entrepreneur who owns and operates two businesses (A and B) would like to analyze their profitability. They would like your help in the analysis. They give you the annual net profit (in thousands of $) for each business from 2008-2020. Table 1: Annual Net Profits for Businesses A and B Business Year Profit Business Year Profit 2008 -50 2008 -10 2009 57 2009 30 2010 71 2010 27 2011 64 2011 22 2012 60 2012 21 2013 50 2013 20 A 2014 41 2014 24 2015 59 2015 24 2016 71 2016 32 2017 71 2017 36 2018 74 2018 37 019 81 20 40 2020 97 2020 49 a. Suppose you want to graph the distribution of profits. Explain why using only one stem- plot might not be optimal for the analysis. b. Describe the correct stemplot to use. Generate this stemplot. Explain your steps. What can you say about the distribution from this stemplot? c. When are stemplots useful? And why is that? d. Suppose that instead of having 26 observations you have 200 observations. What graph should you generate? e. What other type of…
3. Aquasystem performed a make/buy analysis to for making a new water filters. The filter sells for $50 that will require equipment that will cost $200,000 and $25,000 annual operating cost comprise the fixed cost. The variable cost is $20 per filter. The equipment has a 5 year life, no salvage value, and the MARR is 6% per year. The decision to make the filter was based on breakeven point and the historical sales level of 500 filter per year. a. Determine the breakeven point b. An engineer investigated that a supplier can make the filter for $30 each. Determine whether Aquasystem should make or buy the filters.

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