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1 year ago

Which investment would you select if you were risk neutral?

Business

1 answer:

nadezda [96]1 year ago

8 0

Here, the investor is risk-neutral.

A=0

Thus, U = E(r).

We have the requisite information to answer the question, hence option E is eliminated.

Investment Mean Return Std Dev U

1 0.12 0.3 0.12

2 0.15 0.5 0.15

3 0.21 0.16 0.21

4 0.24 0.21 0.24

Thus, it can be seen that investment 4 given the maximum utility, and is thus the selected investment for a risk neutral investor. Thus, option D.

What options does a risk-averse individual select?

When someone is considering different investment options, they are said to have a risk-neutral mentality.
One is considered to be risk neutral if they just consider possible profits, regardless of the danger.
To assess profit without considering risk may look like a dangerous behavior by nature.

Learn more about risk-neutral person

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The complete question is -

Use the below information to answer the following question Investment WN - Expected Return E() 0.12 0.15 0.21 0.24 Standard Deviation 0.3 0.5 0.16 0.21 U= E(r)-(A/2)s2 Which investment would you select if you were risk neutral? A. 1 B.2 C. 3 D. 4 E. Cannot be determined from the information given. If you are risk neutral, your only concern is with return, not risk.

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The listing and selling brokers agree to split a 7% commission fifty-fifty on a $96,900 lot sale. The listing broker is on a 30%

Sergio039 [100]

Answer:

1,187.03

Explanation:

he listing and selling broker each get 50% of the 7 5 commission.

The commission equal 7/100 x $96,900

Each broker gets =3,391.5

The selling broker (broker working with the buyer) get 35 % of 3,391.5

=35/100 x 3,391.5

=1,187.025

=1,187.03

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3 years ago

Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at

Alja [10]

Answer:

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2nd Plan Earning per Share $ 2.30

The Second Plan provides better earnings per share.

Explanation:

1st Plan:

Income before Interest and taxes 1,008,000

Bonds Payable Interest: (144,000)

Income before taxes 864,000

Income tax expense (345,600)

Net Income 518,400

Quantity of Common Stock:

$ 1,440,000 / $5 = 288,000

Earing per share:

518,400 / 288,000 = $1.80

2nd Plan:

Income before Interest and taxes 1,008,000

Bonds Payable Interest: (72,000)

Income before taxes 936,000

Income tax expense (374,400)

Net Income 561,600

Preferred Shares Dividends (120,000)

Available for common stock 441,600

Quantity of preferred Stock:

$1,200,000 / $10 =120,000 shares

Dividends on Preferred Shares:

120,000 x $1 = 120,000

Quantity of Common Stock:

$ 960,000 / $5 = 192,000

Earing per share:

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3 years ago

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At the same time, there is no doubt that Google has expanded people's access to information and to many other online services around the world. It has made several global public statements against censorship. Its most vocal critics, indeed, have pointed to its previous stands for free access to information in pointing out the hypocrisy of Dragonfly and other ventures.

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2 years ago

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Norma-Jean [14]

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3 years ago

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Hoochie [10]

Answer:

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Explanation:

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3 years ago