When Jill Thompson received a large settlement from an automobile accident, she chose to invest $120,000 in the Vanguard 500 Ind
1 answer:
You might be interested in
Answer:
$65
Explanation:
The inverse demand function is as follows:
P = 120 - Q
TR = 120Q - Q²
MR = 120 - 2Q
The marginal cost is constant at $10.
The profit maximizing point is where MR = MC
MR = MC
102 - 2Q = 10
Q = 55
P = 120 - Q = $65
check additional details in the attached files
Answer:
The annualized return of the investment is R=0.286 or 28.6%.
Explanation:
The expected value takes into account all the possible outcomes and their probabilities. In this case, there are only 2 possible outcomes:
1) Mexican government lose control of the economy. Probability: 25%.
2) The Mexican government don't lose contol of the economy. Probability: 75%
In the Case 1, the local stock market will fall by 10% and the peso will lose 20%.
The return in dollars can be calculated as:
being ΔSM the return of the stock market and ΔP the apreciation of the peso.
For the Case 2, we have that the local stock market will rise by 5% and the peso will appreciate by 5%.
The return in this case is
Then, the expected value is:
The expected dollar return in the 90 days is R=0.065.
If we annualized, the annual rate of return of this investment is: