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If the economy does well, the investor's wealth is 2 and if the economy does poorly the investor's wealth is 1. Both outcomes are equally likely. The investor is offered to invest in shares of a project that gains 3=2 if the economy does well and loses 1 if the economy does poorly. Therefore, if the investor obtains α shares of this project his wealth is 2 + 3α/2
with probability 1/2 and 1= α with probability 1/2. The investor is an expected utility maximizer with utility index u(z) = ln z. What is the optimal α for this investor? (α must be between 0 and 1).
A salesperson visits from house to house to sell her knives. The probability that she makes a sale at a random house is .3. Given that she makes a sale, the sale is worth $100 with
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For many decades, there has been considerable attention paid to identifying various factors that help to reduce the number of fatalities on Australian roads. In 1964 Victoria and S
for this proportion, use the +-2 rule of thumb to determine the 95 percent confidence interval. when asked if they are satisfied with their financial situation, .29 said "very sat
calculate variance and standard deviation of the following sample 12,22,32,13,12,23,34,52,56,23,44,32,11,11
Exercise: (Binomial and Continuous Model.) Consider a binomial model of a risky asset with the parameters r = 0:06, u = 0:059, d = 0:0562, S0 = 100, T = 1, 4t = 1=12. Note that u
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Explanation of descriptive statistics Describe what these descriptive statistics show or what recommendations you would create to AIU. What information do you now have as a re
find the average rate of increase in population which in the first decade has increased 20%.in the second 25% and in the third 44%
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