What do these statistics tell you about the possible risks

Assignment Help Financial Management

Reference no: EM131014412

Determined there is a 25% chance that oil prices will increase, which would reduce profits by $25,000. However, there is a 25% chance that oil prices will fall significantly, which would increase profits by $50,000. There is also a 50% chance that oil prices will only fall slightly, improving profits by $5,000. With regard to the sovereign risk, there is a 50% chance that the country’s government will impose a new tax, which would reduce profits by $50,000, and a 50% chance that no change will be made to the tax code. Quantitatively evaluate this data by calculating the expected impact, the standard deviation, and the coefficient of variation for each risk. What do these statistics tell you about the possible risks?

Reference no: EM131014412

Questions Cloud

Work out a non-trivial problem and try and explain each step : you will have covered a variety of concepts such as polynomials, exponents, and factoring. Pick one of the topics you have covered and share with us your interpretation of some of definitions, rules, and methods used in solving.

Calculate the torque developed and the ef?ciency : A 400-V DC shunt motor has ?eld and armature resistances of respectively 100 and 0.1 Ω. If the motor absorbs 40 kW from the electric grid, calculate the line, armature, and ?eld current.

Diagnostic criteria for mental disorder : As a diagnostic tool, the DSM includes diagnostic criteria for mental disorders. In addition, it includes information such as prevalence, risks, prognoses, gender-related issues, and cultural considerations for these disorders

What do these statistics tell you about the possible risks : Determined there is a 25% chance that oil prices will increase, which would reduce profits by $25,000. However, there is a 25% chance that oil prices will fall significantly, which would increase profits by $50,000. There is also a 50% chance that oi..

What is the firm after tax- cost f debt : Sincery Station Corp needs to raise $ 549000 to improve its manufacturing plant. It has decided to issue 1000 par value bond with an annual coupon rate of 10.3 percent with interest paid semiannually and a 10 yrs maturity. Investors require a rate of..

Calculate the armature and ?eld currents : A 250-V shunt generator provides 5 kW to a certain load. The armature and ?eld resistances are respectively 0.5 and 200 Ω. Calculate the armature and ?eld currents, the electromotive force, and the torque required to move the generator, if it runs..

Why is it currently in vogue : Childhood disorders often gain popularity during a specific time period. Select a commonly diagnosed childhood disorder and discuss. Why is it currently in vogue

Issues a bond with par value-current price of the bond : Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 10 years to maturity, and a coupon r..

User Account

All Pages