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Paraphin [41]
3 years ago
10

Investor A has an initial wealth of $100 and a utility function of the form: U(w) = log(w) where w is her wealth at any time. In

vestment Z offers her a return of −18% or +20% with equal probability. i. What is her expected utility if she invests nothing in Investment Z? ii. What is her expected utility if she invests entirely in Investment Z? iii. What proportion a of her wealth should she invest in Investment Z to maximize her expected utility? What is her expected utility if she invests this proportion in Investment Z?
Business
1 answer:
stepladder [879]3 years ago
5 0

With this initial investment of 100, the investors utility if she invests nothing is 2. If she invests entirely her utility is 2.00432

From the available question, these are the the solutions from option (i) to (iii)

i.) We have utility defined as

U(w) = log w

w = 100

Utility=log(100)

= 2

ii) If she invests entirely in Z, utility:

return*probability\\

-18% x 50% =  -9%

20% x 50% = 10%

-9% + 10% = 1%

w = 100 + 1

= 101

Utility = log(101)

= 2.00432

This is her utility if she invests entirely in Z.

iii) This investor has these two choices:

  • invest in z
  • leave resources idle

If she invests in z she gets a 1% increase. Therefore her wealth increases or is maximum when she invests in Z.

Her utility if she invests this proportion in Z is the same as what was solved in (ii) above.

Read more on brainly.com/question/4203540?referrer=searchResults

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Common arguments that go against CSR are:
Ambiguity in business policies.
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Shareholders' rights
Explanation:
Against
The public should perceive the company as their savior and not their enemy. CSR helps a company stay in the good books of the public. If a cigarette manufacturing company opens a profit free farm or a recreational park for the public, it will ensure the maintenance of a positive image.
Morally, when a company takes something from the public e.g their clean air, or clean environment, then morally the company is bound to give something in return e.g a water filtration plant.
CSR can lead the public to support the company during times of need. A company during tough times might get several volunteers if it is known to have given much to the public.
Co-dependence is essential for the survival of both the organization and the public. Companies excel if the public likes them. If a company has been known to have only take and never give, then the balance is disturbed.
Against:
Not every company has the resources or interest to focus on one problem. Therefore, ambiguous policies of different organizations lead to partial working on one social issue or environmental issue. it leads the problem to be partially solved and not completely eliminated.
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Answer:

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Answer:

elastic, because many other firms produce the same standardized product

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A good has perfect price elasticity when a change in price leads to an infinite change of quantity demanded.

A perfect competition is when there are many buyers of homogenous goods and services. The sellers are price takers; prices are set by the market force.

A perfect competition has perfect price elasticity because goods sold are standardised and identical with other goods in the market. If the seller increases its price, it's demand would fall to zero as consumers would shift demand to other subsituite goods.

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Answer: EMPATHY

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4 years ago
Read 2 more answers
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