Risk aversion and investment

Assignment Help Operation Management

Reference no: EM131129907

Risk aversion and Investment Consider an investor who has available the sum of $15,000 for investment, and is considering investing in stocks X1, X2, and X3. The prices of these stocks during the last 12 months are provided in the table below. The investor also has an option of keeping the money and not investing (Cash). The objective is to maximize net profits (revenues minus costs). Month 1 2 3 4 5 6 7 8 9 10 11 12 X1 40 42 44 40 46 48 50 41 48 38 40 40 X2 120 118 120 116 122 115 123 124 117 119 118 116 X3 60 61 58 52 54 49 55 37 38 40 39 45 The prices (these are not net returns) shown are the closing prices on the last business day of each month. Assume that you are currently in the end of month 12. i.e. purchasing prices for stocks are those of month 12. For risk aversion coefficient assume the values of 0, 0.0005, 0.0006, 0.0007, 0.0008, 0.0009, 0.001, 0.002, 0.01, 0.2,0.3 1. Turn in the mathematical formulation of this problem . Carefully, cleanly, and clearly define all your sets and variables.

Reference no: EM131129907

Questions Cloud

Less and less about labor costs : Given that GE is a well-known and highly admired company that also tends to be trend-setter in its business practices, what are the implications for the fact that its globalization is more and more about talent and markets, and less and less about la..

About the podcast ads : Podcast Ads. If you really want an ad, go through podcast. They are cheap, easy, and effective. Find a podcast that relates to the type of service or product your company offers and strike a deal. They are always looking for advertising and are willi..

Write at least three marketing communications objectives : Write at least three marketing communications objectives using the AIDA framework discussed in the course content. Write at least three marketing communications objectives using the AIDA framework discussed in the course content.

The health reform law : The Health Reform Law (ACA) includes a provision to prohibit physicians having any ownership interest in “specialty” hospitals (e.g., those primarily providing cardiac surgery, or orthopedic surgery, etc.) from receiving Medicare payment for any serv..

Risk aversion and investment : Risk aversion and Investment Consider an investor who has available the sum of $15,000 for investment, and is considering investing in stocks X1, X2, and X3. The prices of these stocks during the last 12 months are provided in the table below. The in..

Requires electric motors as part of major assemblies : You are a manufacturing engineer at a firm that requires electric motors as part of major assemblies. You can purchase the motors for $350 each today with a 5% per year increase. The manufacturing of the motors will require an investment of $300,000 ..

Beliefs and attitudes essay : Beliefs and Attitudes Essay People don’t like it when their beliefs, attitudes, and behaviors are inconsistent. We don’t approve of this inconsistency in others, either. In a two-page essay, consider why this is so by answer the following questions: ..

Forecasting is based on projecting historical information : Continue with analyzing feedback within your supply chain at EBBD. Forecasting is based on projecting historical information into the future to provide some type of goal or expectation for system performance. Forecasting can also be based on qualitat..

Fictitious vendors-theft and embezzlement : Control. Write a brief explanation of desirable controls, missing controls, and especially the kinds of “deviations” that could arise from the situation described in the case. Audit of balance. Write some procedures for getting evidence about the exi..

User Account

All Pages