Mathematics, 25.02.2021 18:50 haileysolis5
An investor has $1000 to invest in speculative stocks. He is considering investing m dollars in stock A and (1000- m) dollars in stock B. An investment in stock A has a 0.6 chance of doubling in value, and a 0.4 chance of being lost. An investment in stock B has a 0.7 chance of doubling in value, and a 0.3 chance of being lost. The investor's utility function for a change in fortune, x, is U(x)=log(0.0007x+1) for-1000 1000. x
(a) What is R (for a fixed m)? (It consists of four elements. )
(b) what is the optimal value of m in terms of expected utility?
(Note: This perhaps indicates why most investors opt for a diversified portfolio of stocks.)
Answers: 2
Another question on Mathematics
Mathematics, 21.06.2019 13:50
James wants to promote his band on the internet. site a offers website hosting for $4.95 per month with a $49.95 startup fee. site b offers website hosting for $9.95 per month with no startup fee. for how many months would james need to keep the website for site a to be a better choice than site b? define a variable for the situation. write an inequality that represents the situation. solve the inequality to find out how many months he needs to keep the website for site a to be less expensive than site b. using words, describe how many months he needs to keep the website for site a to be less expensive than site b.
Answers: 1
Mathematics, 21.06.2019 21:30
Acompany charges $0.10 for each letter engraved. bobby plans to spend no more than $5.00 on the engraving on a jewelry box. write and solve an inequality to find the maximum number of letters he can have engraved.
Answers: 1
Mathematics, 21.06.2019 22:00
Identify the expression equivalent to 4(x + x + 7) − 2x + 8 − 4 by substituting x = 1 and x = 2.
Answers: 2
You know the right answer?
An investor has $1000 to invest in speculative stocks. He is considering investing m dollars in stoc...
Questions
Mathematics, 08.10.2019 23:30
