Risk Aversion and Question

Question 3 (5 points) Suppose your dear old Grandfather approaches you for investment advice. He knows of your great training in finance and statistics and gives the following instructions: â€Å"Obviously, I want to maximize my returns, but since my life is now quite boring, I also enjoy a good thrill. My first priority is to pick the security with the highest return. After that, pick me the most volatile investment so I can enjoy the thrills of holding risk. Suppose there are three securities (X, Y, and Z) to choose from next year, the economy will be in an expansion, normal, or recession state with probabilities 0. 0, 0. 20, and 0. 40 respectively. The returns (%) on the securities in these states are as follows: Security X {expansion = +13, normal = +9, recession = +7}; Security Y,{+1 5,+1 5,+2}; Security Z {+17,+10,+2. 5}. Which investment best fits your grandfather's needs? Your Answer Correct. Once you see the calculations, his preferences determine the obvious choice. Securi ty X. An exposure to how your choices depend on your risk preferences. Question 4 (10 points) The more idiosyncratic risk in the return of a security, the larger the risk premium investors will demand.Your Answer True False. 10. 00 Correct. You understand risk-aversion and the implied diversification by investors. 10. 00 / 10. 00 Fundamentals of risk and diversification. Question 5 (10 points) We often want to find investments that perform well when other parts of our portfolio are struggling. When considering stocks to add to the portfolio, those with a correlation closer to zero with our existing portfolio will most effectively help us diversify. Your Answer Correct. You understand relationships and their critical role in diversification. True.Again, understanding relationships and diversification. Question 6 (10 points) As a CEO you wish to maximize the productivity of your workers. You are thinking about providing your employees with smartness so they can be readily available to clients and increase sales. However, you are also concerned that your employees are Just as likely to download APS that will distract them from their work, leading them to play games and update their social networking sites rather than focus on the Job of pleasing clients. To test this you randomly select 6 employees for an experiment.You provide 3 with the new smart phone and the other 3 use their existing technology. The following chart shows their changes in sales. Based on this small sample, what is the correlation between smartened and increase in sales? [Hint: It may help to use the spreadsheet function COERCE to calculate the correlation] (Enter the answer with no more nor less than two decimal places, and leave off the % sign. For example, if your answer is 13. 97% you should enter it as 13. 97 NOT 0. 14 nor 14) {Anthony, Smartened: Yes; change in sales 120; Kirk,Smartened No; Change in Sales 60; Michael, Smartened No; Change in Sales 150; Scarlet. , Smartened Yes; Change i n Sales 130; Pete, Smartened Yes; Change in Sales 40; Angela, Smartened No; Change in Sales 60. } Answer for Question 6 You entered: Your Answer 8. 03 Correct. You know how to calculate/measure relationships. Calculation of correlation; important to finance and Just about anything else. Question 7 (10 points) Investors generally do not like to bear risk. Because of this, the price of an otherwise identical government bond relative to a corporate bond will be Your The same. Lower. Higher. Correct.You will be willing to pay less for something that you dislike relative to the alternative. Total Simple pricing of risk-aversion. Question 8 (1 5 points) Suppose your client is risk-averse but can invest in only one of the three securities, X, Y, or Z, in an uncertain world characterized as follows. Next year the economy will be in an expansion, normal, or recession state with probabilities 0. 40, 0. 40, and 0. 20, respectively. The returns (%) on the three securities in these states are as follows: Security X {expansion = +14, normal = +10, recession = +7}; Security Y {+1 1, 9, +8}; Security Z {+13, +8, +7. }. Which security can you rule out, that is, you will not advise your client to invest in it? Your Answer Inherent 0. 00 Calculate the basic statistics for all three securities and evaluate them based on risk- return trade-offs. Security Z. None of the securities. 0. 00/ 15. 00 This is a real life situation that requires you to think through a bit. Question 9 (15 points) You have Just taken over as a fund manager at a brokerage firm. Your assistant, Thomas, is briefing you on the current portfolio and states â€Å"We have too such of our portfolio in Alpha.We should probably move some of those funds into Gamma so we can achieve better diversification. † Is he right? [Hint: Feel free to use spreadsheet statistical functions. ] Here is the data on all three stocks. Assume, for convenience, that all three securities do not pay dividends. Alpha, Current Price 4 0; Current Weight 80%; Next Year's Price: Expansion 48, Normal 44, Recession 36; Beta, Current Price 27. 50; Current Weight 20%; Next Year's Price: Expansion 27. 50, Normal 26, Recession 25; Gamma, Current Price 15; Current Weight 0%; Next Year's Price: Expansion 16. 0, Normal 19. 50, Recession 12. Your Answer It depends. Yes. 15. 00 Correct. You know how to calculate relationships and to make informed portfolio management decisions. No. 15. 00/ 15. 00 A good question for figuring out portfolio composition given that we are into diversification. Question 10 (1 5 points) Suppose there are two mortgage bankers. Banker 1 has two $1,000,000 mortgages to sell. The borrowers live on opposite sides of the country and face an independent probability of default of 5%, with the banker able to salvage 40% of the Ortega value in case of default.Banker 2 also has two $1,000,000 mortgages to sell, but Banker g's borrowers live on the same street, have the same Job security and income. Put differe ntly, the fates and thus solvency of Banker g's borrowers move in lock step. They have a probability of defaulting of 5%, with the banker able to salvage 40% of the mortgage value in case of default. Both Bankers plan to sell their respective mortgages as a bundle in a mortgage-backed security (MBPS) (I. E. , as a portfolio). Which of the following is correct? Your Answer Banker 1 ‘s MBPS has a higher expected return and more risk.Banker g's MBPS has a higher expected return and more risk. Banker 1 ‘s MBPS has more risk, but the expected returns on both MBPS are the same. Banker Xi's MBPS has a higher expected return and less risk. Banker g's MBPS has more risk, but the expected returns on both MBPS are the same. Correct. You can calculate, and base decisions on, risk-return trade-offs. Banker g's MBPS has a higher expected return and less risk. A topical issue given the current crisis; requires you to both calculate and make decisions based on risk-return trade-offs.

Over Population in the Philippines Essay

1.Introduction 1.1Purpose of the study: to discuss and cite ways on how to prevent overpopulation in the Philippines. 1.2Significance of the study: to make people realize how alarming is overpopulation. 2.Meaning of Overpopulation 3.Overpopulation facts 3.1Causes of Overpopulation 3.2Effects of Overpopulation 3.3Solutions to Overpopulation 4.Manila: A megacity where the living must share with the dead ( Jenny Kleeman’s Article ) 5.Conclusion 1.Introduction The purpose of the study is to discuss about overpopulation in our country. Using library research and internet. I will elaborate the causes and effects, as well as the possible solutions to this social phenomenon. I will also include in my studies about the article of Jenny Kleeman, his point of view on Manila. A presentation such as this is important for us to realize that our country being overpopulated is alarming. I believe that behind this studies, I can help about this problem that not only the Philippines are facing, but also the world. 2.Meaning of Overpopulation The term â€Å"Overpopulation† is the condition where the number of organisms  exceeds the carrying capacity of their habitat. It has impacted the life of common man and has proved to be one of the gravest difficulties that have to be fought. It implies scarcity of resources and economic inflation; these are the monsters which can make life miserable. (The Threat of Overpopulation (Earth Issues) pp. 177-179) Defined by those books that I’ve read, truly Overpopulation is a serious problem. As I search for more meanings about it, this come out: Overpopulation is the condition of having a population so dense as to cause environmental deterioration, an impaired quality life, or a population crash. It is A situation which occurs when the number of occupants of an area exceeds the ability of that area to provide for those.

The communcation gap between man and women Essay

The communcation gap between man and women - Essay Example In order to overcome difficulties in communication, it is necessary to take into account a lot of factors, starting from basic gender differences and social roles of men and women. Both differences in verbal and non-verbal communication should be taken into account in order to bridge communication gap between men and women. There are three decisive points that determine communication gap between opposite sexes: the way of thinking, speaking and decision making are different. The process of thinking among men is divided into sections. They consider everything properly, step by step focusing on one detail after another. Women think globally, they consider the whole things in general; they have no sections in their thinking. Men’s way of thinking can be compared with files stored on the computer: thoughts and ideas about different events are stored separately. Men don’t mix up such sections as Work, Personal relations, Hobbies etc. Thus, when a wife asks his husband to buy something on his way from work to home and he buys nothing, it means that he was concerned about his section Work. Women in their thinking combine different thoughts from different periods of their lives; they look at events in their life globally. Women try to draw parallels between different events. On this basis a lot of arguments may occur between spouses: a wife can compare her husband’s behavior with the one shown by him months ago and he may get irritated. The things different to him are equal to her. Thus sectional and global ways of thinking are two different and unique ways of thinking. Another difference occurs in the way of speaking between men and women. Men speak about facts with no details or descriptions; they speak in short phrases. Women speak in paragraphs and more concerned about details, descriptions than about facts. Women enjoy telling a story; men enjoy when they talk about facts. Therefore if you want to reach

Critiquing Marijuana Legislation Essay Example | Topics and Well Written Essays - 2250 words

Critiquing Marijuana Legislation - Essay Example The author of the essay "Is there any Justice: Marijuana as Medicine - the Case for Legalization" begins with that the legalization of marijuana for medicinal purposes is viewed by many as one of the worst things that we could do. There are many reasons that people feel that marijuana should not be legalized for medical uses. Marijuana is an illegal substance and until that is changed; prescribing it is against the law. Dr. Jerome Kassirer wrote that, "Attorney General Janet Reno announced that physicians in any state who prescribe the drug could lose the privilege of writing prescriptions, be excluded from medicare and Medicaid reimbursements, and even be prosecuted for a federal crime". Government officials are not the only ones to object to the legalization of marijuana. Another objection to the legalization of marijuana is shown in "Marijuana for the Sick", where it is pointed out that many parents object to the legalization of marijuana for medical uses. Their objections come fr om a reasonable concern that there has been an increase in the use of marijuana by teenagers. Their concern is expanded since the marijuana of today is much more potent than the marijuana of a few decades ago. Another concern regarding the legalization of marijuana for medicinal purposes is that there is strong evidence that shows that regular use of marijuana for long periods of time could cause severe lung damage. If the use of marijuana could damage a patient's lungs, then the risk could outweigh the benefit. The strongest point that many make opposing the legalization of marijuana is that there just is no clear evidence that smoking marijuana can help an individual who is ill (Abrams, Child & Mitchell, 2005). History of Marijuana and its use in medical field The history of the beneficial use of marijuana is a long one. Marijuana is one of the oldest drugs known to man, the use of which has been documented as far back as 2700 B.C. in a Chinese manuscript (Bakalar & Grinspoon, 2007) Although no actual studies were performed at the time, the simple fact that marijuana had been used for such an extensive period of time, shows that it can be used as a beneficial substance in helping those who are ailing. There has been research done in more recent times on the effectiveness of marijuana. Many reports are in favor of utilizing medical marijuana. In 1839, a respected member of the Royal Academy of Science, Dr. W. B. O'Shaugnessy, was one of the first in the medical profession, who presented positive facts dealing with marijuana and medicine (Bakalar & Grinspoon, 2007). In one Journal of American Medical Association article, "Marijuana as Medicine, a Plea for Reconsideration" stated that from 1840 to 1900, more than one hundred articles by Ameri can and European medical journals were published that showed the therapeutic uses of marijuana. Now recall the first criteria for a drug to be considered a controlled

Justification Report Essay Example | Topics and Well Written Essays - 500 words

Justification Report - Essay Example From among the host of publications and journals reviewed, the following three were actually evaluated: Logistics Management, Transportation Journal and Journal of Business Logistics. However, since our organization would only require one journal, I recommend the Logistics Management since it complies with the criteria set for the most appropriate journal in our profession. As a brief overview of the journal, the Logistics Management boasts of keeping â€Å"logistics and supply chain professionals up-to-date on the latest news and trends in transportation services, equipment and technologies† (EH Publishing Network, 2011). By subscribing to it, our organization would be abreast with the current news, trends and offers that are crucial in the services we offer. The detailed information that makes this journal preferential among the others are as follows: 1. Cost and frequency of publication. Its detailed subscription offer for new subscribers is detailed herein: Cover Price: $9 9.00; Sale Price: $0.00; Savings: 100% (12 issues free delivery within US and Canada). Offered and delivered once a month, new subscribers are given an introductory promotion of receiving free 12 subscribed copies for the first year to enable us to try and avail of their journal. 2. Content.

Conversation between men and women Essay Example | Topics and Well Written Essays - 750 words

Conversation between men and women - Essay Example This is because men and women do not interpret things the same way. They react differently during conversations. This in turn creates a lot of conflicts and misunderstandings. The question that arises is as to whether men do not listen to women as they claim or is it that women do not understand men and how they participate during conversations. It is as to whether people can understand and appreciate each other despite of their gender differences and hence walk out of conversations feeling listened to and well understood. In this essay, my main focus will be on the reasons why men and women communicate the way they do and what can be done so that there may be effective communication across the gender divide. It will be argued out that the way we talk is largely influenced by the kind of values that are instilled in us especially o by our parents and the society we live in and not necessarily the way we choose or want to. We need to understand each other when we are communicating in order to avoid instances where conflicts arise due to miscommunications. We needlessly blame "others or ourselves------ or the relationship" (Tannen pg. 17) instead of identifying the gender differences that we have among us and try to understand and accommodate them. Boys and girls essentially are instilled with different sets of cultural values hence it seems that when men and women converse it is like people from two different cultures conversing. Obviously, there will be conflicts due to cultural differences. (Tannen pg. 18) shows that "because boys and girls grow up in what are essentially different cultures...talk between women and men is that of cross-cultural communication" .The fact that the society teaches males and females differently makes them relate differently to one another hence the need to understand each other. Men naturally strive to seek for competition in their conversation so that they are not seen to be losers. They need to show that they are competent and therefore the best in every issue that arises in a conversation. That is why they always give details even on what they have not been asked. The society has taught them to strive to be always dominating and never to appear like they are being controlled. She calls this kind of conversation from men as "report talk". Women on the other hand tend to communicate with the intention of obtaining acceptance in a relationship so that they get the feeling that they belong. According to women, "talk is the glue that binds or holds relationships together" (Tannen pg.85), thus women try to confirm that they are supportive to men by listening keenly so as to establish a good relationship with the men. According to Tannen, women see the world as a network of connections that need to be supported and accepted. They struggle to maintain closeness a nd hence enhance relationships. She calls this "rapport talk". Another problem that occurs on conversations between men and women is consultation. Most women will complain that men do not try to ask about something before they endeavor to undertake it even when they do not have knowledge about it. Tannen gives an example of how women try to consult the husband before inviting someone to their home. This is to ensure that her relationship with the husband remains good. On the contrary, men choose to bring a visitor home without consulting the wife if they sense the visitor will

A rhetorical analysis on How Society in the United States Views Research Paper - 1

A rhetorical analysis on How Society in the United States Views Abortion and what impact the media has on that view - Research Paper Example Iyengar, Shanto; Hahn, Kyu S. Red Media, Blue Media: Evidence of Ideological Selectivity in Media Use. Journal of Communication, 59.1 (2009): 19-39 - This article is geared towards showing that the public is always aligned towards media houses that cover news that are aligned to their political interests. It follows then that there is a partial selectivity on the news that people on National television due to a perceived bias. Such a trend is worrying and may erroneously inform the public which negatively impacts the society. The article concentrates on proliferation of biased media houses which is important for this paper in the abortion debate perception. National Survey of State Laws. Abortion. 16th Nov 2012. Web 2008 http://www.encyclopedia.com/topic/abortion.aspx - This is the primary text that provides information about the different legislations that govern the abortion debate. Most of these legislations are quite controversial and they have led to a polarized public with two extreme views on the debate. Rohlinger, Deana A. "Friends and foes: Media, politics, and tactics in the abortion war." Social Problems 53.4 (2006): 537-561 - This paper concentrates on how politics and the media interplay to inform the public about the abortion debate. Both politics and media strategies influence each other in presenting facts about sensitive debates touching on the US public. The media on its part employs different tactics to bring out their messages to the public which influences perceptions of controversial issues in US. As such, this article provides important information on the broad tactics used by media and enhances knowledge on the dynamics of politics in the abortion debate. Weitz, Tracy A., and Yanow Susan. â€Å"Implications of the Federal Abortion Ban for Womens Health in the United States.† Reproductive Health Matters, 16.31 (2008): 99-107 - Authors of this article expound on the impacts of the Partial Birth