Question Details

What is the probability that you zero in a week



1.	Sources of positive net present value projects include
a.	buyer preferences for established brand names
b.	economies of large-scale production and distribution
c.	patent control of superior product designs or production techniques
d.	a and b only
e.	a, b, and c


	

2.	Receiving $100 at the end of the next three years is worth more to me than receiving $260 right now, when my required interest rate is 10%.
	a.	True
	b.	False

		
	
3. 	The number of standard deviations z that a particular value of r is from the mean ȓ can be computed as z = (r - ȓ)/ Suppose that you work as a commission-only insurance agent earning $1,000 per week on average.  Suppose that your standard deviation of weekly earnings is $500.  What is the probability that you zero in a week?  Use the following brief z-table to help with this problem.

			Z value	Probability
		-3		.0013
		-2		.0228
		-1		.1587
		0		.5000	

a.	1.3% chance of earning nothing in a week
b.	2.28% chance of earning nothing in a week
c.	15.87% chance of earning nothing in a week
d.	50% chance of earning nothing in a week
e.	none of the above

	
	t

			T

4.	Consider an investment with the following payoffs and probabilities:
		State of the Economy	Probability	Return
		Stability	.50	1,000
		Good Growth	.50	2,000
	Determine the expected return for this investment.
a.	1,300
b.	1,500
	c.	1,700
	d.	2,000
	e.	3,000

			



5.	Consider an investment with the following payoffs and probabilities:
State of the Economy	Probability	Return
GDP grows slowly	.70	1,000
GDP grow fast	.30	2,000
	Let the expected value in this example be 1,300.  How do we find thestandard deviationof the investment?
a.	 =  { (1000-1300)2 + (2000-1300)2 }
b.	 =  { (1000-1300) + (2000-1300) }
c.	=  { (.5)(1000-1300)2 + (.5)(2000-1300)2 }
d.	=  { (.7)(1000-1300) + (.3)(2000-1300) }
e.	=  { (.7)(1000-1300)2 + (.3)(2000-1300)2 }



Economics Assignment Help, Economics Homework help, Economics Study Help, Economics Course Help