Donna is looking into investing a portion of her recent bonus into the stock market. While researching different companies, she discovers the following standard deviations of one year of daily stock closing prices. Masterful Pocketwatches: Perfect Plungers Plus: Standard deviation of stock prices = $9.83 Standard deviation of stock prices = $1.22 Based on the data and assuming these trends continue, which company would give Donna a stable long-term investment?
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- FIVE. Which of the following is true about standard deviation? The first step in calculating the standard deviation is calculating the square root. The second step in calculating the standard deviation is to subtract each measurement from the intermediate value and then square that difference. The last step in calculating the standard deviation is to sum the squared values and divide by the number of values minus one. Standard deviation is a type of average where the positive and negative numbers sum to zero. The amount of difference of the measurements from the central value is called the sample standard deviation.Economics Consider a supplier that manufactures a product at $2 per unit and sells them to retailers at $7 per unit. The retailer sells each product to the end consumer at $10. At this retail price, market demand is normally distributed, with a mean of 1,000 and a standard deviation of 300. The supplier agrees to buy back unsold products for $b even though any leftover product at the end of sale period are worthless. a) What is the retailer's order quantity under local optimization when b=0? b) What is the optimal order quantity under global optimization? Round up to the nearest integer. Derive the optimal value of b. c) With the optimized value of b in the buyback clause, how many discs should an independent retailer order? Round up your solution to the nearest integer. d) What is the expected overstocking given the optimized value of $b? What is the expected understocking given the optimized value of $b? What is retailers' expected profit? What is the manufacturer's expected profit?5. Shift-in-charge Nazar Al Rushdy: Nazar is pessimistic about the market price. What is your guidance for Nazar? The decision to employ decision trees in crucial situations has been taken by Salem Al Harthi, the plant manager. The table below presents data on demand for a duration of 6 hours along with their respective probabilities. The first row of the table provides the probability of demand for the initial three hours when a leak occurs, denoted in parentheses. Subsequently, the following three rows indicate the probabilities of high, medium, and low demand for the succeeding three hours. To illustrate, if the initial 3-hour market price was low, the probabilities of high demand, medium demand, and low demand in the next three hours are 0.2, 0.3, and 0.5, respectively. Market price High Market price Medium Initial 3-hrs (0.2) Initial 3-hrs (0.5) Market price Low Initial 3-hrs (0.3) High demand (next (0.5) (0.4) (0.2) 3 hrs) Medium demand (0.3) (0.2) (0.3) (next 3 hours) Low demand…
- Consider an insurance company that sells car insurance to several thousand households in south Florida. Each policy has a return of 1% and a standard deviation of 5%. Policyholders only submit claims when they get into car accidents. Assume that car accidents are uncorrelated across policyholders. What is the standard deviation of the insurance company's returns?ABC Co. is considering a new consumer product. They believe there is a probability of 0.3 that XYZ Co. will come out with a competitive product. If ABC introduces a low-value product and XYZ introduces a competitive product, ABC's expected loss will be $10,000. and if XYZ does not introduce a competitive product, ABC expects a profit of $35,000. If ABC introduces its high-value product and XYZ follows with a competitive product then ABC expects a profit of $30,000, on the other hand, if XYZ does not come out with the competitive product, the profit of ABC is expected to be $80,000. Express the above problem in a pay-off matrix (tabular) form.A drug dealer knows whether his supply is high quality (@ = H), mediocre (@ = M), or low quality (@ = L). He values his product at $30 if it is high quality, $20 if it is mediocre, and $10 if it is low quality. A potential buyer values the drugs at $30 + x if they are high quality, $20 + x if mediocre, and $10 + x if low quality, where 0 < x < $5. The buyer does not know the quality of the product - he only knows that each quality is equally likely : Pr(@ = H) = Pr(@ = M) = Pr(@ = L) = 1/3. The buyer offers a price p for the drugs, which the dealer can either accept or reject. Assume if the dealer is indifferent, then he accepts. 1. In equilibrium, which drug qualities are sold, and at what price? 2. Now, suppose Pr(@ = H) = Pr(@ = L) = 1/4, while Pr(@ = M) = 1/2. Find the values of x for which mediocre drugs will be sold?
- Consider an investment that pays off $700 or $1,600 per $1,000 invested with equal probability. Suppose you have $1,000 but are willing to borrow to increase your expected return. What would happen to the expected value and standard deviation of the investment if you borrowed an additional $1,000 and invested a total of $2,000? What if you borrowed $2,000 to invest a total of $3,000? Instructions: Fill in the table below to answer the questions above. Enter your responses as whole numbers and enter percentage values as percentages not decimals (.e., 20% not 0.20). Enter a negative sign (-) to indicate a negative number if necessary. Invest $1,000 Invest $2,000 Invest $3,000 Expected Value Percent Increase Standard Deviation 1150 S 28 % $ 8 % $ Expected Return N/A Doubled Tripled : #A computer reseller needs to decide how many laptops to order next month. The lowest end laptop costs $220 and the retailer can sell these for $300. However, the laptop manufacturer already announced that they are coming out with a new model in a couple of months. Any laptops that will not be sold by the end of next month will have to be heavily discounted at half-price. The reseller also needs to consider that every time he fails to fulfill a laptop order, he stands to lose $25 for every unit. Based on the past months’ sales, the reseller estimates the demand probabilities for sales (S) as follows: P(0 units) = 0.3; P(1 units) = 0.4; P(2 units) = 0.2; P(3 units) =0.1. The reseller thinks it’s a good idea to conduct a survey on whether or not his customers are going to buy laptops and how many. The survey results will either be Yes (Y), No (N) or Don’t Know (DK). The probability estimates of the results based on the demand for number of units are: P(Y|S = 0 units) = 0.1 P(Y|S = 1…A computer reseller needs to decide how many laptops to order next month. The lowest end laptop costs $220 and the retailer can sell these for $300. However, the laptop manufacturer already announced that they are coming out with a new model in a couple of months. Any laptops that will not be sold by the end of next month will have to be heavily discounted at half-price. The reseller also needs to consider that every time he fails to fulfill a laptop order, he stands to lose $25 for every unit. Based on the past months’ sales, the reseller estimates the demand probabilities for sales (S) as follows: P(0 units) = 0.3; P(1 units) = 0.4; P(2 units) = 0.2; P(3 units) =0.1. The reseller thinks it’s a good idea to conduct a survey on whether or not his customers are going to buy laptops and how many. The survey results will either be Yes (Y), No (N) or Don’t Know (DK). The probability estimates of the results based on the demand for number of units are: P(Y|S = 0 units) = 0.1 P(Y|S = 1…
- A computer reseller needs to decide how many laptops to order next month. The lowest end laptop costs $220 and the retailer can sell these for $300. However, the laptop manufacturer already announced that they are coming out with a new model in a couple of months. Any laptops that will not be sold by the end of next month will have to be heavily discounted at half-price. The reseller also needs to consider that every time he fails to fulfill a laptop order, he stands to lose $25 for every unit. Based on the past months’ sales, the reseller estimates the demand probabilities for sales (S) as follows: P(0 units) = 0.3; P(1 units) = 0.4; P(2 units) = 0.2; P(3 units) =0.1. The reseller thinks it’s a good idea to conduct a survey on whether or not his customers are going to buy laptops and how many. The survey results will either be Yes (Y), No (N), or Don’t Know (DK). The probability estimates of the results based on the demand for the number of units are: P(Y|S = 0 units) = 0.1…Cameron sells premium steak at the local market. He has a lot of customers due to the promising taste and texture of his steak. One kilogram of his premium steak costs $80.50. However, it would only cost $68.50 per kilogram if a customer buys 3 kilograms and $58.50 per kilogram if a customer buys 5 kilograms. Cameron can supply 100 kilograms of premium steak in a day, but his supply only lasts for an hour and a half. Which of the following statements is true? With this pricing scheme, Cameron is extracting all the consumer surplus. Cameron is basing his pricing scheme on the maximum amount a customer is willing to pay for his premium steak. Cameron is using third degree price discrimination by charging different prices for different "blocks" of kilograms for his premium steak. Cameron receives a larger revenue and profts with this pricing scheme compared to charging a single lower price for larger quantities. None of the above are true.Managers of the restaurant, NicePizzeria@Nola, have to plan for the number of pizzas they want to make at the beginning of each day. Based on market research, the managers know the daily demand can only be one of the three levels: 30, 40 or 50 pizzas. Also, the probabilities of getting a daily demand of 30, 40, 50 pizzas are 0.3, 0.4, 0.3 respectively. The managers decide that their tentative daily supply of pizza should also be one of the three levels: 30, 40 or 50 pizzas. Each pizza costs $3 to make and the price is $8 per pizza. Note: The profit for each pizza sold is $5. For the ones supplied but not sold, the profit is -$3. Fill in the following profit table (hint: use two-way table ) and use the profit table to answer the questions. Three demand levels 30 40 50 30 Three supply 40 levels 50 1) What is the maximin supply level? 2) What is the maximum expected profit (across three supply levels)?