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Suppose that as an owner of a federally insured S&L in the 1980s the price of real estate falls, and most of your loans go into default. In fact, so many loans go into default that the net worth of the S&L is a negative($5 million). Federal regulators haven't realized this yet, but they will shortly. As a a last-ditch attempt to save the bank, you attract $1 million in new deposits w/very generous interest rates to depositors. You have 2 possible investments you can make w/the $1 million. You can invest in stock market, which will pay $4 million w/probability 0.5 and $2 million w/probability 0.5. Alternatively, you can invest in junk bonds, which pay off $10 million w/probability 0.1 and $0.5 million w/probability 0.9.
a. Which investment has the highest expected value to an ordinary investor? Show your calculations.
b. Which investment has the highest expected value to you, the S&L owner? Show your claculations.
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The absolute value of coefficient of the price elasticity of demand.
What is the prediction for the change in weight of someone who grows 1.5 inches? What is the predicted difference in weight between 2 people who differ by 6 inches in height? (c). Suppose that the sample average of H is 56 inches. What is the sampl..
Explain how can federal government spending crowd out private sector investment and consumption.
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A method commonly used through both governments and private health insurers to control the growth in private health insurers to control the growth in health care expanding are limits to reimbursement to providers.
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Describe which is elastic and inelastic in the attached question and also how to arrive at the answer for this question:
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