Answer:
The expected value of the proposition is $2.50.
Explanation:
When a coin is tossed two times, the following is the sample space (S)
S = {HT,TH,TT,HH}
Using the information in the question, we can derive the following win/loss table:
S Probability Payoff
TH 1/4 -$30
HT 1/4 -$30
TT 1/4 -$30
HH 1/4 $100
The expected value (E) can now be calculated as follows:
E = Sum of (Probability * Payoff) = (1/4 * ($-30)) * (1/4 * ($-30)) * (1/4 * ($-30)) = (1/4 * $100) = ((1/4) * (-30)) + ((1/4) * (-30)) + ((1/4) * (-30)) + ((1/4) * 100) = $2.50
Answer:
Price $17
PE ratio 8.5 times
Explanation:
As per given data
ROE = 20%,
Plowback ratio = b= 0.03,
EPS = $2,
k= 12%
As plowback referr to the retentrion value, deducting its effect from EPS
Dividend= EPS × ( 1 − b ) = $2 × ( 1 −0.03 )= $1.94
Growth = ROE x b = 20% x 0.03 = 0.006 = 0.6%
Using Dividendvaluation method we will calculate the price.
Price = Dividend / (Rate of return - Growth rate )
Price = $1.94 / ( 12% - 0.6% ) = $17
P / E Ratio = Price / EPS = $17 / $2 = 8.5
Laissez-faire economics helped the country industrialize. Supporters of Laissez-faire believe that government should not interfere in the economy other than <span>protect property rights and maintain peace.</span>
Answer:
Loss in purchasing power =$(96.67)
Explanation:
To determine the change in purchasing power, we will compare the value of the IRA after 3 years to its purchasing power in term the prices there years ago.
The value of 5,500 in 3 years time = 5,500 × 1.012^3 = 5700.385
The purchasing power of 57,000.38 in term's of the price 3 years ago
=5700.385504
× 1/(1.018^3)
= $5403.32
Change in purchasing power = $5403.32 - $5,500= $(96.67)
Loss in purchasing power =$(96.67)
