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4 :Zhong Shanshan has three major routes to take to work. She can take Donghuamen Road the entire way, she can take several back streets to work, or she can use the expressway. However, the traffic patterns are very complex. Under good conditions, Donghuamen Road is the fastest route. When Donghuamen Road is congested, one of the other routes is usually preferable. Over the past two months, Zhong Shanshan has tried each route several times under different traffic conditions. This information is summarized in minutes of travel time to work in the following table: No Traffic Congestion Mild Traffic Congestion Severe Traffic Congestion Road (in minutes) (in minutes) (in minutes) Donghuamen Road 15 30 45 Back Roads 20 25 35 Expressway 30 30 30 In the past 60 days, Zhong Shanshan encountered severe traffic congestion 10 days and mild traffic congestion 20 days. Assume that the last 60 days are typical of traffic conditions. Develop a decision tree. Using EMV criterion, what route should Zhong Shanshan take? 3. Using EOL criterion, what route should Zhong Shanshan take? 4. How much should Zhong Shanshan be willing to pay for perfect information?QUESTION 5 The capital asset pricing model (CAPM) is the most fundamental model for modern finance. It calculates the relationship between the market return and the return from an individual risky financial asset: Y-Bo+B1X+E, where Y is the financial asset's annual return and X is the annual market return (both measured in percentage). Bo can be interpreted as the risk-free return, By is the effect from the market condition. The residual e is the excess roturn over the market condition. Suppose that BO and B1 are estimated to be 2 and 1.2, respectively. In a year, the market return was 10%, but the asset return was 18%. What is the estimated excess return for the asset in the year? A 5% b. 2% c. 4% d. 1% Oe. 3%QUESTION 7 The percentage of variation in the dependent variable explained by the independent variables is a. degrees of freedom b. fitted value c. R-squared Od.t-statistic De. regression sum of squares QUESTION 8 Suppose that a random sample of 200 20-year-old men is selected and that their height and weight are recorded. A regression of weight on height yields an intercept estimate of -30 and a slope estimate of 3, where weight is measured in pounds and height is measured in inches What is the regression's weight prediction for a man who is 70 inches tall? Da. 175 Ob. 190 Oc. 160 d. 170 De. 180Consider an economy with two consumers and two goods. Consumer 1 has endowment wl = (11,8) and utility function U1(x) = =)+2vx]. Consumer 2 has endowment w? = (4,8) and utility function U2(x) = 2+4V/1. (a) Find all Pareto efficient allocations where both consumers consume strictly positive amounts of good 1 and good 2. (b) Argue that any feasible allocation r = (x], r?) where r? = 16 and 12
