Consider a variation of the television station broadcast game of exercise 4 in chapter 7. suppose the stations interact sequentially. first, mbc chooses between 6: 00 and 7: 00. then, after observing mbc’s choice, rbc decides between 6: 00 and 7: 00. finally, after observing the behavior of both mbc and rbc, cbc chooses either 6: 00 or 7: 00. payoffs are as given before. draw the extensive form of this sequential game and compute the subgame perfect equilibrium. is the outcome different from that in the simultaneous-play game? explain.

Lohn corporation is expected to pay the following dividends over the next four years: $18, $14, $13, and $8.50. afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever. if the required return on the stock is 14 percent, what is the current share price?

The total value of your portfolio is $10,000: $3,000 of it is invested in stock a and the remainder invested in stock b. stock a has a beta of 0.8; stock b has a beta of 1.2. the risk premium on the market portfolio is 8%; the risk-free rate is 2%. additional information on stocks a and b is provided below. return in each state state probability of state stock a stock b excellent 15% 15% 5% normal 50% 9% 7% poor 35% -15% 10% what are each stock’s expected return and the standard deviation? what are the expected return and the standard deviation of your portfolio? what is the beta of your portfolio? using capm, what is the expected return on the portfolio? given your answer above, would you buy, sell, or hold the portfolio?

Suppose your rich uncle gave you $50,000, which you plan to use for graduate school. you will make the investment now, you expect to earn an annual return of 6%, and you will make 4 equal annual withdrawals, beginning 1 year from today. under these conditions, how large would each withdrawal be so there would be no funds remaining in the account after the 4th withdraw?