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AnnZ [28]
3 years ago
15

Yuri owns just one ship, he calls it Previt. The ship is worth $25 million dollars. If the ship sinks, Yuri loses $25 million. T

he probability that it will sink is .02. Yuri's total wealth, including the value of the ship is $50 million. He is an expected utility maximizer with utility U(W) equal to W2. What is the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship
Business
1 answer:
alexandr1967 [171]3 years ago
5 0

Answer:

$745,000

Explanation:

Calculation to determine the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship

First step is to calculate the Expected Utility (√W)

Expected Utility = (98% x √$25,000,000) + (2% x √$0)

Expected Utility = $4,900

Second step is to calculate the Fair premium of insurance policy using this formula

Fair premium of insurance policy = Probability of loss x Size of loss

Let plug in the formula

Fair premium of insurance policy = 2% x $25,000,000

Fair premium of insurance policy = $500,000

Third step is to calculate the Maximum premium using this formula

Maximum premium = Maximum utility - Expected Utility²

Let Plug in the formula

Maximum premium = $25,000,000 - $4,900²

Maximum premium = $25,000,000 - $24,010,000

Maximum premium= $990,000

Now let calculate the Maximum amount willing to pay using this formula

Maximum amount willing to pay = (Fair premium + Maximum premium) / 2

Let plug in the formula

Maximum amount willing to pay= ($ 500,000 + $990,000) / 2

Maximum amount willing to pay=$1,490,000/2

Maximum amount willing to pay= $745,000

Therefore the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship is $745,000

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saw5 [17]

Answer:

1) shares held by the issuer that is shares of Firm A held by Firm A

2) the amount of shares issued by the firm

3) the amount of shares which are circulating in the market (issued less treasury stock)

4) is the amount the governement angency in charge of regulations approved the firm to issue It cannot surpass this ammount without their permission being granted

5) shares at which a down payment has been made but, not paid in full by the potential stockholders

Explanation:

DISCLAMER:

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3 0
3 years ago
"To meet the customer's investment objective of tax advantaged income, the BEST recommendation is for the customer to:"
marishachu [46]

Customer Name: Jack and Jill Customer

Ages: 62 and 57

Marital Status: Married - 39 years

Dependents: None

Occupations: Jack - Manufacturing Manager - Dyno-Mite Corp.

Jill - Marketing Consultant - Self Employed

Household Income: $140,000 Joint Income

($100,000 for Jack and $40,000 for Jill)

Net Worth: $1,100,000 (excluding residence)

Own Home: Yes $420,000 Value, No Mortgage

Investment Objectives: Income / Tax Advantaged

Risk Tolerance: Moderate

Investment Time Horizon: 25 years

Investment Experience: 30 years

Tax Bracket: 30%

Current Portfolio Composition: Cash in Bank: $30,000

Growth Fund: $50,000

Variable Annuity: $50,000

Growth Stocks: $150,000

Retirement Accounts:

Jack's IRA: $100,000 invested in growth stocks

Jack's 401(k): $600,000 invested in Dyno-Mite Corp. stock

Jack's 529 Plan for Grandchild: $20,000 in growth mutual fund

To meet the customer's investment objective of tax advantaged income, the BEST recommendation is for the customer to:

A. immediately liquidate the entire Dyno-Mite position and invest the proceeds in high yield bonds

B. set a minimum and maximum threshold price to liquidate as much of the Dyno-Mite stock as the customer will permit, and invest the proceeds in high yielding common and preferred stocks

C. liquidate the IRA without penalty since Jack is past age 59 1/2, and use the proceeds to buy corporate income bonds

D. consider early retirement, since Jack is old enough to receive Social Security as a means of supplementing income

Answer:

B. set a minimum and maximum threshold price to liquidate as much of the Dyno-Mite stock as the customer will permit, and invest the proceeds in high yielding common and preferred stocks

Explanation:

Given that, the customer has a "moderate" risk tolerance level and dividend income is at the moment taxed at the preferential rate of 15%, therefore, it is expected that investments in high yielding common and preferred stocks will meet the customer's objective of tax-advantaged income.

Hence, the right answer is Option B. set a minimum and maximum threshold price to liquidate as much of the Dyno-Mite stock as the customer will permit, and invest the proceeds in high yielding common and preferred stocks

5 0
3 years ago
Which form shows a business's financial performance over a reporting period?
My name is Ann [436]

Answer:

d

Explanation:

4 0
3 years ago
Honest Tea's mission statement is "Honest Tea seeks to create and promote great-tasting, organic beverages. We strive to grow ou
Ilya [14]

Answer:

b Sense-of-mission marketing

Explanation:

This is the sustainable marketing principle that holds an organization also it defines the mission in social terms at broad level instead of the narrow terms of the product

Since in the question it is mentioned that the company used the natural ingredients and promotes the fair trades with the suppliers. So here it is the sense of mission marketing principle

Hence, the option b is correct

6 0
3 years ago
Calculating the price elasticity of supply.
alekssr [168]

Answer:

Explanation:

W1= 30             W2 =50

Q1 = 6              Q2 = 16

Elasticity of supply = (16-6) / (50-30) * (50+30) / (6+16)

 = (10/20) * (80/22) =80/44= 1.82

5 0
3 years ago
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