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Vitek1552 [10]
2 years ago
12

I am a rational and risk-averse person, and I have an option of making the following bet: I receive $500 cash, after which I rol

l a normal 6-sided die. Whatever I roll, I must pay $200 times the value of the roll of the die (so if make the bet and roll a ‘2’, I get $500, then have to pay out $400, thus I win $100 in total). 10. If my goal is to maximize my personal utility, should I accept this bet, and does my exact level risk aversion affect whether or not I should accept the bet? I should accept the bet; the precise level of my risk aversion does not matter I should not accept the bet; the precise level of my risk aversion does not matter I should not accept the bet; the precise level of my risk aversion does matter There is not enough information to determine whether I should accept the bet or not; the precise level of my risk aversion does matter
Business
1 answer:
Tamiku [17]2 years ago
4 0

Answer:

I should not accept the bet; the precise level of risk aversion does matter.

Explanation:

Risk averse person is the one who is not willing to take the risk even if he is given high returns. Risk averse person will always avoid the risks. In the given scenario the person is risk averse. If he rolls out the dice he has to pay $200 times the dice number which means he just have two chance (dice rolls 1 or dice rolls 2) for getting return otherwise he will loose the bet and he will have to pay money from the pocket.

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Long-term investments that cost the company $25 were sold during the year for $54 and land that cost $53 was sold for $28. In ad
adell [148]

Answer:

Explanation:

Long-term Investment cost = $25

Long-term Investment sales value = $54

Gain from Long-term Investment = $(54-25) = $29

Land cost = $53

Land sales value = $28

Loss from sale of Land = $(28-53) = -$25

Cash Dividend paid = $22

Total change in Assets = $(29-25) = $4

Total change in Equity = -$22

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3 years ago
M&M Proposition I with tax implies that:
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Answer:

D. A firm's weighted average cost of capital decreases as the firm's debt-equity ratio increases.

6 0
3 years ago
You are looking to buy a car and you have been offered a loan with an APR of 5.7 %​, compounded monthly. a. What is the true mon
lukranit [14]

Answer:

Monthly Interest rate = 0.475%

EAR = 5.85%

Explanation:

a.

APR = 5.7%

Monthly Interest rate = APR / n

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Monthly Interest rate = 0.475%

b.

APR = 5.7%

m = 12

EAR = [ ( 1 + (APR / m))^m] - 1

EAR = [( 1 + (0.057 / 12))^12] - 1

EAR = [( 1 + 0.00475 )^12] - 1

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EAR = 1.0585 - 1

EAR = 0.0585

EAR = 5.85%

True monthly rate of​ interest is 0.475%

EAR is 5.85%

5 0
3 years ago
Central Supply purchased a new printer for $67,500. The printer is expected to operate for nine (9) years, after which it will b
Sergeu [11.5K]

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Central Supply purchased a new printer for $67,500. The printer is expected to operate for nine (9) years, after which it will be sold for salvage value (estimated to be $6,750).

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Year 1= 2*[(67,500 - 6,750)/9]= $13,500

8 0
3 years ago
What is the most important type of decision that the financial manager makes?
WITCHER [35]

Answer:

The most important decision a financial manager can make is the allocation of funds to various investments

6 0
2 years ago
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