Business, 14.05.2021 02:50 wi8wuwj283jendjdudjd
Question 4: Option Price Calculation (35 points) (a)(5 pts) Define option price. Explain why the option price of a policy might differ from the expected surplus generated by the policy. (b)(5 pts) Define option value. Suppose that a public project is increasing the risk faced by farmers, but the expected income of each farmer does not depend on whether the project is undertaken or not. Let farmer A be risk averse and farmer B be risk neutral. Compare their option values. Now consider the following project: Construction of a Dam. The only person affected by this project is a farmer, with utility U(I) where $I is his income. There are two possible contingencies: it rains a lot (Wet) or it does not rain a lot (Dry). With the Dam, his income is $1000 if Wet and $900 if Dry. Without the Dam, his income is $500 if Wet and $300 if Dry. The probability of raining a lot is 50%. (c)(5 pts) What is the expected surplus of the farmer
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Business, 22.06.2019 12:00
Describe the three different ways the argument section of a cover letter can be formatted
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Business, 22.06.2019 12:50
Two products, qi and vh, emerge from a joint process. product qi has been allocated $34,300 of the total joint costs of $55,000. a total of 2,900 units of product qi are produced from the joint process. product qi can be sold at the split-off point for $11 per unit, or it can be processed further for an additional total cost of $10,900 and then sold for $13 per unit. if product qi is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point?
Answers: 2
Business, 22.06.2019 15:40
As sales exceed the break‑even point, a high contribution‑margin percentage (a) increases profits faster than does a low contribution-margin percentage (b) increases profits at the same rate as a low contribution-margin percentage (c) decreases profits at the same rate as a low contribution-margin percentage (d) increases profits slower than does a low contribution-margin percentage
Answers: 1
Question 4: Option Price Calculation (35 points) (a)(5 pts) Define option price. Explain why the opt...
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