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igor_vitrenko [27]
3 years ago
6

Jim has a choice between two jobs. Job A would pay him $15 an hour with certainty, and the job B is commission based where he co

uld earn $12, with a 50% probability and $18 with a 50% probability. Which job would he choose? a. Neither of the jobs b. Job A c. Job B d. He would choose to exit the labor market
Business
1 answer:
alexandr402 [8]3 years ago
8 0

Answer:

b. Job A

Explanation:

The calculation of choosing the job is given below;

Expected payoff for Job B is

= 0.50 × $12 + 0.50 × $18

= $6 + $9

= $15

And,

The Payoff from job A is $15 with certainty

Now we assume that Jim would be a risk-averse person that selects the thing i.e. sure

So he should choose Job A only

Hence, the correct option is b.

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Answer:

Stock Price is $98.70

Explanation:

given data

exercise price = $100 per share

call price = $25 per share

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solution

we will use here Put Call Parity for find out Stock Price that is express as

C + \frac{100}{(1+r)^t} = S + P    .....................1

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C + \frac{100}{(1+r)^t} = S + P

25 + \frac{100}{(1+0.5)^2} = S + 17

solve it we get

P = $98.70

so Stock Price is $98.70

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