User Account

All Pages

How much money should you invest in the stock

Assignment Help Accounting Basics
Reference no: EM133072878

Question - Suppose you have $10 to invest. You can invest your money in either a risky stock or a safe bond (those are your only two options; all of your money must be in these two assets and ONLY these two assets). The bond is riskless, and offers a guaranteed 2% return. The stock is risky, and can either go up or down. If the stock goes up, it will go up by 5%, if it goes down, it will go down by 2%. How much money, x, should you invest in the stock if your utility function is u(W ) = ln(W ), and the probability the stock will go up is 58% and the probability the stock will go down is 42%?

Reference no: EM133072878

Questions Cloud

COM 200 Communication - The Key to Working Together : COM 200 Communication - The Key to Working Together Assignment Help and Solution, Strayer University - Homework Help
What is the maximum loan amount : Susan is considering buying a class-A office building in Miami. The acquisition price is $2,500,000. She expects the first-year potential gross income (PGI) to
Estimate the value of tigers ltd : Tigers Ltd has $100 million in debt outstanding, in both book value and market value terms, and expects to maintain a debt ratio of 40%. The beta of the stock i
Calculate the estimated inventory at may : Information follows for the month of May: Inventory, May 1 $359,000. Calculate the estimated inventory at May 31, assuming that the gross profit is 25% of sales
How much money should you invest in the stock : How much money, x, should you invest in the stock if your utility function is u(W ) = ln(W ), and the probability the stock will go up is 58%
How confident you have in meeting your goal : You plan to retire in the next 30 years. At retirement, your goal is to spend five years travelling around the world. To achieve this, you want to place an annu
Describe couple of examples of standards in your daily life : Describe a couple of examples of standards in your daily life. For example, following the Student Code of Conduct requires you to follow rules
Essay that reflects your belief about a particular part : Reflects your belief or passion about a particular part of your professional experience. This project requires you to organize complex and divergent thoughts
Decision of the federal reserve bank : Explain how the decision of the Federal Reserve Bank (Fed) to raise interest rates would be expected to affect each component of the weighted average cost of ca

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd