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Currently Lotta £ 95,000 to invest. She faces the following choice: she can buy shares of AstraZeneca and Ericsson. If she invests in AstraZeneca she will lose £ 30,000 with probability 0.5, but with probability 0.4, she will win £ 35,000, while the probability is 0.1 that the value of shares remains unchanged. If she invests in Ericsson, she will lose only £ 20,000 with probability 0.4, but with probability 0.3, she will win only £ 40,000, while the probability is 0.3 that the value of shares remains unchanged. a. Can you tell which investment she prefers to do if she is a risk-averse person? Now suppose instead that she can split their investment and may invest 60% of her 95,000 in AstraZeneca and the rest of Ericsson. The assumptions are otherwise unchanged. Which of the three investments will she choose if she is a risk-averse person? b. Can you tell which investment she prefers to do if she is a risk-neutral person? Now suppose instead that she can split their investment and may invest 40% of her 95000 in AstraZeneca and the rest of Ericsson. The assumptions are otherwise unchanged. Which of the three investments will she choose if she is a risk-neutral person?
Using supply and demand and competitive analyses, explain what happens to a pharmaceutical company's revenues and profits from an individual drug once it loses its patent protection.
The distribution of family income is preferable than the distribution of household income because. The long-run average-total-cost curve does not connect the minimum points of each of the short-run average-total-cost curves. The long-run average-tota..
Grapple Market Share Corporation would like to know what information federal agencies have about Grapple’s operations, so that the firm will know what its competitors may be able to learn about it. Can Grapple require the agencies to disclose whateve..
The world's largest carpet maker has just completed a feasibility study of what to do with the 16000 tons of overruns, rejects, and remnants it produces every year. The company's CEO launched the feasibility study by asking, why pay someone to dig co..
q1. the happy crystal bank of kowloon lends money to risky businesses. the risk premium it charges on its loans is
Business decisions are often subject to constraints or business rules to solve business problems. Excel’s Solver can be used to develop decisions, such as maximizing profit or reducing costs. You need to assume an initial number of productions for ea..
If price controls are initiated, we would expect that
In 2012, WVU president James Clements’ base salary was $775,000. The head football coach, Dana Holgorsen’s base salary was approximately $2.4 million. Why is the football coach paid so much more than the president? Should the head football coach be p..
Some countries have fixed exchange rate systems instead of flexible exchange rate systems. Which of the following is a reason why fixed exchange rate systems have limited abilities to use monetary policy?
Consider a company that produces dog toys. The only resources that the company uses to produce these toys are Capital (i.e. machines and raw materials) and Labor (i.e. workers). The company sells 10,000 toys a month at $100 per toy. Write down the to..
Assume increase in government spending. Would the effect on AD be larger if the Fed held MS constant in response or if the Fed were committed to maintaining a fixed interest rate?
Consider the following supply and demand schedule for steel: Pollution from steel production is estimated to create an external cost of sixty dollars per ton. From an economic point of view, what is the best solution to this environmental conflict of..
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