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2 years ago

A simple optimal portfolio problem is the cash matching problem.

Business

1 answer:

liraira [26]2 years ago

5 0

Answer:

The units of the 5-year zero coupon bond that should be purchased in the optimal portfolio is:

= 6 units

Explanation:

a) Data and Calculations:

Spot rates = 5% annually

Yield of a 1-year zero coupon bond = 5%

Yield of a 2-year zero coupon bond = 5%

Yield of a 3-year zero coupon bond = 5%

Yield of a 4-year zero coupon bond = 5%

Yield of a 5-year zero coupon bond = 5%

Yield of a 6-year up to a 10-year zero coupon bond = 5%

Future Monetary Obligations:

YEAR 1 2 3 4 5 6 7 8 9 10

OBLIGATION 100 200 300 400 500 600 700 800 900 1000

PV factor 1.05 1.1025 1.1576 1.2155 1.2763 etc.

Present value of a 5-year zero coupon bond = $78.35 ($100/1.2763)

Number of units of the 5-year zero coupon bond that should be purchased in the optimal portfolio = 6.382 ($500/$78.35)

= 6 units

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Paula Reid is the manager at the Miami office of the U.S. Secret Service who set in motion a major prostitution scandal by repor

Elan Coil [88]

Answer:

The answer is: She used the justice approach, realizing that the greater good is served because people learn to help each other in their own interest.

Explanation:

Justice approach: an ethical decision is a decision that distributes benefits and costs (or punishments) among those involved in a fair, equitable, and impartial way.

Paula used this approach because she believed the agents had acted improperly and that they were harming the US Secret Service.

I consider any organization a team, so in order for it to work well its members must be respected both by their peers and by the other teams´ members. If you consider the various types of activities this specific agency carries out, other not so friendly "teams" (other secret services or even terrorists) could use this type of information to damage or compromise those activities. So the well being of all the country was being jeopardized by a group of bad agents.

7 0

3 years ago

An annuity that goes on indefinitely is called a perpetuity. The payments of a perpetuity constitute a/an series. The equation i

Alborosie

Answer:

Present value of the security = $1,888.89

Explanation:

The annual dividend of $170 represents a perpetual income stream. The present value of a perpetuity is calculated as follows:

$PresentValue=\frac{Coupon}{r}$

where r =interest rate per annum that would be compounded for each year

Therefore, present value of the security = $\frac{170}{0.09}$ = $1,888.89

4 0

2 years ago

Under state law, a manufacturer must design a dangerous product so as to avoid harm to people who are using the product as inten

kumpel [21]

Answer:

b. liable, because it was foreseeable that a child would have access to and try to use a lighter.

Explanation:

BIC must foresee that any child may access the lighter, so they should put some warning on product so that the adults will notice to put lighters away reach of children.

6 0

2 years ago

Private solutions to correct for externalities consider the following scenario:________.

Charra [1.4K]

Answer: Charities; coordinating negotiations among all of the parties too costly

Explanation:

From the question, we are told that that a chicken farm uses a nearby stream to dispose of the wastes that is released by its chickens and that the wastes flow downstream into a lake that has become polluted due to the waste matter. The local office of a nonprofit environmental organization then collects enough donations in order to stop the farm's pollution.

The type types of private solutions to the pollution externality which has occured is charity. This is because it is a voluntary activity. The money collected is meant for a specific objective which is to tackle the issue of pollution.

It is also vital to note that sometimes the private solutions to externalities might not work. For example, this occurs when communications barriers or social customs are important enough relative to the potential gains involved that coordinating negotiations among all of the parties too costly.

6 0

2 years ago

A machine would cost $100,000, and would generate revenues of $21,000 per year. However, O&M costs would be $7,000 per year.

fgiga [73]

Answer:

(a) What is the net present value of this potential investment?

Net present value of Investment is $(3,903)

(b) Should you invest in this machine?

We should not invest in this investment because Net present value of this investment is negative by discounting Minimum acceptable rate of return.

Explanation:

Present Values:

Revenue $144,146

O&M Cost ($48,049)

Initial Investment <u>$(100,000)</u>

Net Present value $(3,903)

Working :

Present Value Calculation = P x ( (1- ( 1 + r )^-10) / r

Revenue = $21,000 x ( (1- ( 1 + 0.075 )^-10) / 0.075 = 144,146

O&M Costs = $7,000 x ( (1- ( 1 + 0.075 )^-10) / 0.075 = 48,049

8 0

2 years ago

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