User Account

All Pages

Calculate the expected value and variance of the income

Assignment Help Business Management
Reference no: EM131234268

Assume that you inherit a small business that in good years earns $10,000 net income but in bad years earns just $2,500. The probability of a good year is 60%.

a. Calculate the expected value and variance of the income.

b. Suppose you have a utility function of U(W)=√W and you have zero initial wealth. If someone offers to pay $6,500 (a guaranteed payment) in order to lease and run the business, should you take it?

c. Why might someone else make such an offer? Provide three reasons, one of which must refer explicitly to risk attitude

Reference no: EM131234268

Questions Cloud

Projected dividend for the coming year : The required return on this stock is 15 percent, and the stock currently sells for $50 per share. The projected dividend for the coming year is $. (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))
Discuss an emerging trend or legal issues : Research, identify, and discuss an emerging trend or legal issues involving cyber law or Internet law. Examples could include but are not limited to the following topics: E-contracts and E-signatures
Management right to cashflows over firm a : If firm A owns 50% of firm B, Firm B owns 50% of firm A, and a management company owns 1% of both firm A and B, what are management's right to cashflows over firm A?
Identify any four abnormal demand curves : A normal demand curve is assumed to be downward sloping, identify any four abnormal(exceptional) demand curves
Calculate the expected value and variance of the income : a. Calculate the expected value and variance of the income. b. Suppose you have a utility function of U(W)=√W and you have zero initial wealth. If someone offers to pay $6,500 (a guaranteed payment) in order to lease and run the business, should y..
Identify other likely winners and losers from the trends : There is a similar trend in tourism where pressures of work and longer hours force holidaymakers to take more short breaks. UK residents took over 39 million holidays abroad in 2001, with Spain the most popular destination (26% of holidays abroad)..
Describe the mission and vision statements : Which firms are in it? What do they do? What are their market shares, profit figures, size, etc.? How have these figures been changing over the past decade? Be sure to provide demand statistics and industry structure. Provide a sense of the indu..
What is culture and why is it important : What is culture and why is it important to understand its layers and functions and to what extent are the different types of organizational culture related to important outcomes
Create two programs in java for computers : CSIT111/811 - Programming Fundamentals - create two programs in Java for computers to accomplish two tasks: manage a play list of songs and simulating a new card game called BlackJoker.

Reviews

Write a Review

Business Management Questions & Answers

  Company influence his ability to delegate

How does Goldman's experience as the founder of the company influence his ability to delegate?

  Long history of conglomerate enterprise

ITT Corporation has had a long history of conglomerate enterprise. In recent years however, the company has undergone some significant changes. How would you describe these changes and what do you think were the drivers? Explain. Use the internet ..

  In-group favoritism play a role in decision

Could in-group favoritism play a role in this decision? If you were the CEO, what decision would you have made?

  Explain you may provide additional references

Explain You may provide additional references but references do not replace the articles that relate to your key term.

  To reduce inflation the fed must use selector 1

To reduce inflation, the Fed must use selector 1 expansionary contractionary

  How do the control newell uses fit its strategy

Newell Company grew to be a diversified manufacturer and marketer of simple household items, cookware, and hardware. In the early 1950s, Newell Company's business consisted solely of manufactured curtain rods that were sold through hardware stores..

  Types of events you are planning

Rosie Ann Krauses restaurant  or Restort one- to two-pages (not including title and reference pages), describe an event planning business you would like to start. You will use this business for your Final Paper. Provide an explanation of the natur..

  Explain the types of power this leader used and the impacts

Explain the types of power this leader used and the impacts that were achieved, This is for a leadership and organizational behaviour class- Have you met any leaders who have had a truly significant impact on your life?

  Organizational culture of the company

Create a research paper that discusses how one company (of your choice) illustrates social responsibility in its environment. Discuss what leadership does to promote social responsibility and how this ties to ethics and the organizational culture of..

  What is the fixed cost and what is the variable cost

Simon Tam is negotiating passage on Serenity as a clandestine fugitive from the planet Persephone. He is told that the 184 million kilometre trip to Osiris will cost $3,230. Alternatively, he can take a 344 million kilometre trip to Bellerophon, but ..

  What should be the role of planning, plans in organizations

According to Mintzberg, what led to the 'fall' of strategic planning and why does he feel it will rise again?

  Members of the strategic planning committee

Your organization's CEO is concerned that members of the strategic planning committee are not familiar with current economic thought and principles. The CEO has assigned you the task of developing an 875-word report to introduce some of these thou..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd