{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-06T02:02:38-04:00", "answer_date": "2024-06-06 02:02:38", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "2331869", "url": "\/study-help\/questions\/please-refer-to-the-screenshot-of-the-issue-thanks-in-2331869", "question_creation_date_js": "2024-06-06T02:02:38-04:00", "question_creation_date": "Jun 06, 2024 02:02 AM", "meta_title": "[Solved] Please refer to the screenshot of the iss | SolutionInn", "meta_description": "Answer of - Please refer to the screenshot of the issue. thanks in advance. 18. Problem 8.18 (Expected Returns) eBook Suppose you | SolutionInn", "meta_keywords": "refer,screenshot,issue,thanks,advance,18,problem,8.18,expected,returns,ebook,won", "question_title_h1": "Please refer to the screenshot of the issue. thanks in advance. 18. Problem 8.18 (Expected Returns) eBook Suppose you won the lottery and had two", "question_title": "Please refer to the screenshot of the issue. thanks in advance. 18.", "question_title_for_js_snippet": "Please refer to the screenshot of the issue thanks in advance 18 Problem 8 18 (Expected Returns) eBook Suppose you won the lottery and had two options (1) receiving $0 1 million or (2) taking a gamble in which, at the flip of a coin, you receive $0 2 million if a head comes up but receive zero if a tail comes up a What is the expected value of the gamble Enter your answer in millions For example, an answer of $550,000 should be entered as 0 55 Round your answer to two decimal places million b Would you take the sure $0 1 million or the gamble Select c If you chose the sure $0 1 million, would that indicate that you are a risk averter or a risk seeker Select d Suppose the payoff was actually $0 1 million that was the only choice You now face the choice of investing it in a U S Treasury bond that will return $106,000 at the end of a year or a common stock that has a 50 50 chance of being worthless or worth $220,000 at the end of the year 1 The expected profit on the T bond investment is $6,000 What is the expected dollar profit on the stock investment Write out your answer completely For example, 0 25 million should be entered as 250,000 Round your answer to two decimal places $ 2 The expected rate of return on the T bond investment is 6 What is the expected rate of return on the stock investment Round your answer to two decimal places 3 Would you invest in the bond or stock Select 4 Exactly how large would the expected profit (or the expected rate of return) have to be on the stock investment to make you invest in the stock, given the 6 return on the bond Round your answer to two decimal places If no exact answer can be obtained, enter 0 5 How might your decision be affected if, rather than buying one stock for $0 1 million, you could construct a portfolio consisting of 100 stocks with $1,000 invested in each Each of these stocks has the same return characteristics as the one stock that is, a 50 50 chance of being worth zero or $2,200 at year end I Investing in a portfolio of stocks would definitely be a deterioration over investing in the single stock II Investing in a portfolio of stocks would definitely be an improvement over investing in the single stock III The situation would be unchanged Select v Would the correlation between returns on these stocks matter Select v", "question_description": "\"image

Please refer to the screenshot of the issue. thanks in advance.<\/p>

\"image<\/div><\/div><\/div> 18. Problem 8.18 (Expected Returns) eBook Suppose you won the lottery and had two options: (1) receiving $0.1 million or (2) taking a gamble in which, at the flip of a coin, you receive $0.2 million if a head comes up but receive zero if a tail comes up. a. What is the expected value of the gamble? Enter your answer in millions. For example, an answer of $550,000 should be entered as 0.55. Round your answer to two decimal places. million b. Would you take the sure $0.1 million or the gamble? -Select c. If you chose the sure $0.1 million, would that indicate that you are a risk averter or a risk seeker? -Select- d. Suppose the payoff was actually $0.1 million - that was the only choice. You now face the choice of investing it in a U.S. Treasury bond that will return $106,000 at the end of a year or a common stock that has a 50-50 chance of being worthless or worth $220,000 at the end of the year. 1. The expected profit on the T-bond investment is $6,000. What is the expected dollar profit on the stock investment? Write out your answer completely. For example, 0.25 million should be entered as 250,000. Round your answer to two decimal places. $ 2. The expected rate of return on the T-bond investment is 6%. What is the expected rate of return on the stock investment? Round your answer to two decimal places. % 3. Would you invest in the bond or stock? -Select- 4. Exactly how large would the expected profit (or the expected rate of return) have to be on the stock investment to make you invest in the stock, given the 6% return on the bond? Round your answer to two decimal places. If no exact answer can be obtained, enter 0. % 5. How might your decision be affected if, rather than buying one stock for $0.1 million, you could construct a portfolio consisting of 100 stocks with $1,000 invested in each? Each of these stocks has the same return characteristics as the one stock - that is, a 50-50 chance of being worth zero or $2,200 at year-end. I. Investing in a portfolio of stocks would definitely be a deterioration over investing in the single stock. II. Investing in a portfolio of stocks would definitely be an improvement over investing in the single stock. III. The situation would be unchanged. -Select- v Would the correlation between returns on these stocks matter? -Select- v", "transcribed_text": "", "related_book": { "title": "Financial and Managerial Accounting the basis for business decisions\t ", "isbn": "0077664078, 978-0077664077, 78111048, 978-0078111044", "edition": "16th edition", "authors": "Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/290.jpg", "uri": "\/textbooks\/financial-and-managerial-accounting-the-basis-for-business-decisions-16th-edition-290", "see_more_uri": "" }, "free_related_book": { "isbn": "1018571485", "uri": "\/textbooks\/report-on-the-improvement-of-the-city-of-dubuque-iowa-to-joint-committee-representing-dubuque-commercial-club-civic-division-of-dubuque-womans-club-and-trades-and-labor-congress-1st-edition-978-1018571485-312520", "name": "Report On The Improvement Of The City Of Dubuque Iowa To Joint Committee Representing Dubuque Commercial Club Civic Division Of Dubuque Womans Club And Trades And Labor Congress", "edition": "1st Edition" }, "question_posted": "2024-06-06 02:02:38", "see_more_questions_link": "\/study-help\/questions\/business-economics-2023-September-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/set-up-a-spreadsheet-that-can-be-used-to-estimate", "description": "Set up a spreadsheet that can be used to estimate cash paid for inventory. Then determine the cash paid for inventory with the following parameters: A. Inventory, beginning...", "stars": 3 }, { "url": "\/study-help\/heat-and-mass-transfer-fundamentals-and-applications\/glycerin-at-50f-is-flowing-over-a-flat-plate-at-1121621", "description": "Glycerin at 50F is flowing over a flat plate at a free stream velocity of 6 ft\/s. Determine the velocity and thermal boundary layer thicknesses at a distance of 0.5 ft from the leading edge. Also...", "stars": 3 }, { "url": "\/study-help\/psychology\/did-the-researcher-provide-sufficient-description-1979937", "description": "Did the researcher provide sufficient description?", "stars": 3 }, { "url": "\/enrique-rodrigues-has-54300-this-year-as-represented-by-point", "description": "Enrique Rodrigues has $54,300 this year, as represented by point A. He has the opportunity to make an investment in productive assets represented by point B in the following figure. He wants to...", "stars": 3 }, { "url": "\/study-help\/questions\/the-chair-of-the-federal-reserve-is-considered-one-of-9876640", "description": "The chair of the Federal Reserve is considered one of the most important economic positions in the world because this person has significant direct control over the conduct of in the United States....", "stars": 3 }, { "url": "\/study-help\/questions\/ex-loves-to-work-with-his-hands-and-is-very-8097189", "description": "ex loves to work with his hands and is very good at making small figurines. Three years ago, Rex opened Bronze Age Miniatures (BAM) for business as a sole proprietorship. BAM produces miniature...", "stars": 3 }, { "url": "\/study-help\/questions\/1-ralph-abernathy-owns-a-small-coffee-shop-he-wants-1004979", "description": "1. Ralph Abernathy owns a small coffee shop. He wants to know the average number of customers queuing (lining up) in his coffee shop, to decide whether he needs to add more space to accommodate more...", "stars": 3 }, { "url": "\/study-help\/questions\/provide-a-brief-outline-of-how-diversity-policy-needs-to-1004709", "description": "provide a brief outline of how diversity policy needs to apply to your place of work\/type of business", "stars": 3 }, { "url": "\/study-help\/questions\/united-states-dollar-strengthen-and-weakening-present-current-valuation-us-1005230", "description": "United States dollar strengthen and weakening: Present current valuation (U.S. Dollar versus the two countries' currency) and effect on corporate profits for China vs Indonesia", "stars": 3 }, { "url": "\/study-help\/questions\/what-is-meant-by-the-term-cash-flow-for-1004731", "description": ". What is meant by the term cash flow? For the table below determine the yearly cash flows and the total cash flow. If a discounting rate of 8% is used what is the Net Present Value? Year 0 1 2 3 4 5...", "stars": 3 }, { "url": "\/study-help\/questions\/give-two-additional-competencies-that-will-be-required-for-future-1005465", "description": "Give two additional competencies that will be required for future project management efforts", "stars": 3 }, { "url": "\/study-help\/questions\/please-answer-all-13-assume-a-company-has-only-one-7060471", "description": "please answer all 13 Assume a company has only one service department and two operating departments (A and B). The service department's budgeted varloble costs in total and on a per unit basis were...", "stars": 3 }, { "url": "\/study-help\/moral-issues-in-business\/do-you-agree-that-loyal-employees-have-more-motivation-that-1553088", "description": "Do you agree that loyal employees have more motivation? That llley are more trustworthy? What about the idea that a persoo who is loyal at wOlt \n \n \n \n Answered: 1 week ago", "stars": 3 }, { "url": "\/study-help\/moral-issues-in-business\/is-loyalty-intrinsically-valuable-how-important-a-value-is-loyalty-1553086", "description": "Is loyalty intrinsically valuable? How important a value is loyalty? Who or what are you loyal to? How does loyalty to ones employer compare to other kinds of loyalty?", "stars": 3 }, { "url": "\/study-help\/moral-issues-in-business\/when-if-ever-would-it-be-apjfopriate-to-be-loyal-1553084", "description": "When, if ever, would It be ap(Jfopriate to be loyal to a large, publicly traded corporation? What are the risks of being a loyal employee?", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/what-is-the-minimum-line-of-credit-lo-request-tiom-2331868", "next": "\/study-help\/questions\/newtons-method-will-converge-to-a-true-solution-if-you-2331870" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Finance", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-finance" }, { "name": "Please refer to the screenshot of the issue. thanks in advance. 18.", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/please-refer-to-the-screenshot-of-the-issue-thanks-in-2331869" } ], "skill_details": { "skill_id": "13", "skill_name": "Finance", "parent_id": "1" } }1" } }