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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).
Question Following the general methodology used by econometricians as explained in the session for week 1 (eight steps), explain how you would proceed to determine if a good com
DISCUSS THE METHODS OF MEASURING TREND
Estimate a linear probability model: Consider the multiple regression model: y = β 0 +β 1 x 1 +.....+β k x k +u Suppose that assumptions MLR.1-MLR4 hold, but not assump
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a) What is meant by secular trend? Discuss any two methods of isolating trend values in a time series.
The calculations of arithmetic mean may be simple and foolproof, but the application of the result may not be so foolproof. An arithmetic mean may not merely lack
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#questionMaximize Z= 3x1 + 2X2 Subject to the constraints: X1+ X2 = 4 X1 - X2 = 2 X1, X2 = 0..
(a) If one solves the ordinary differential equation using Euler's method find an expression for the local truncation error. (b) Using the result of (a) above what will
what is the independent variable in how energetic do people feel after drinking different types of soft drints?
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