what is the risk

Q: Suppose an asset has a return of $416 with probability of 85% and a return of $980 with probability…

A: We have  combinations of retun and probabilities for a risk averse person.

Q: What is the risk premium(s)?

A: Market Risk Premium: The amount that remains after deducting the risk-free rate of return from the…

Q: Jane loves risk; her Bernoulli utility function is given by u(w) = w². She participates in a ottery…

A: Given information: Jane is a risk lover and its utility function is given below: u = w2 where 'w' is…

Q: Question 1: Using Figure 11.1, illustrate the probability that someone will obtain insurance for…

A: The method of transferring a part or full amount of the risk associated with an event in exchange of…

Q: Show your work. An MBA applies for a job in two firms X and Y. The probability of his being selected…

A:

Q: Diego's current wealth is $800, but there is a 0.2 probability that he will lose $100. Diego is risk…

A: Given; Current wealth= $800 Probability of losing $100= 0.2 Diego is a risk neutral person.

Q: Uncertainty The Utility fct is U = W2/3 + 1000 Flood occurs with Probabilities=1/20. The Value of…

A: Answer in Step 2

Q: What is the Risk-Adjusted Discount?

A: The risk adjusted discount is calculated by using the formula as follows:

Q: Greg works as a carpenter. There is a 3 percent chance he loses a finger which they value at…

A: Expected utility (without insurance) = 0.03(50,000) + 0.97(2,50,000) = 244,000

Q: when does

A: Risk and return in investing are strongly correlated. Increased risk typically goes hand in hand…

Q: What is heuristics

A: Behavioral economic:Behavioral economics is the part of the economic discipline which studies human…

Q: True or False: You can protect against unsystematic risk. O True O False

A: Unsystematic risk is specific and unique to a firm or individual. This risk is diversifiable. In…

Q: Use fos S egjuilib The

A: In the free market, equilibrium price and quantity is determined by the forces of the demand and…

Q: remain uninsured? 5. Amanda has a utility of money function of u(w)=wª. Her initial wealth is…

A: The utility that an entity or the entire economy is projected to accomplish in a variety of…

Q: Your utility function is U = w, where W is your wealth. Your current wealth is $800. There is a 25%…

A: Basics:- Risk Averse:- It means play safely with investment options. In other words taking less or…

Q: Describe the difference between risk and uncertainty. Which one is more preferable and why?

A: Risk is the probability of winning or losing associated with an outcome. Chances of risk arise out…

Q: how do you calculate customer's life time value?

A: In this world of tough competition customers are acquired and lost over the firm’s lifetime, but a…

Q: Risk they say it’s in every decision we make as humans. Kindly discuss a positive or negative RISK…

A: In financial terms, risk is defined as the possibility that an outcome or investment's real gains…

Q: ng FOC for each

A: Answer Budget constraint : I = P121 + P2.02 + R =    Implies R=1- P1.21 - 02.02 =    Substitute this…

Q: Gavin Jones’s friend is planning to invest $1 million in a rock concert to be held 1 year from now.…

A: Variance is a proportion of the scattering of potential upsides of an arbitrary variable. For the…

Q: 5. Amanda has a utility of money function of u(w)- w. Her initial wealth is w-$20,000 a she faces…

A: Given: U = w0.75  Inital wealth = $20,000 Probability of loss = 0.1 Loss = $5000 Probability of no…

Q: For the signaling game here, find all separating perfect Bayes–Nash equilibria.

A: In signalling games, a separating equilibrium is one sort of perfect Bayesian equilibria that can…

Q: example of situations that will you will use empirical, classical, and subjective approach to…

A: a) Subjective probability refers to the probability of something happening based on an individual’s…

Q: Consider the setup from Questions 1 and 2. How much profits, in expectation, does the insurance…

A: The profit earned by the insurance company will equal the amount spent by the company when it…

Q: You have $1,000 that you can invest. If you buy Ford stock, you face the following returns and…

A: The expected return is how much benefit or misfortune a financial backer can expect to get on…

Q: Define the term Risk Analysis?

A: Risk analysis is the process to determine, identify, and analyzing risks associated with particular…

Q: 7. Clive has 2 pairs of yellow socks, 3 pairs of red socks, 4 pairs of black socks and 6 pairs of…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

Q: Uncertainty The Utility fct is U = W2/3 + 1000 Flood occurs with Probabilities=1/20. The Value of…

A: *Hi there , as you have asked for multiple sub parts as per our guidelines we will only solve 3 sub…

Q: suppose you pay 25 dollars to enter into a raffle with a 400 dollar prize. if you have a 5% chance…

A: Expected Value = ∑payoff *probability here the winning is $400 with cost of $25. So our actual gain…

Q: An expected utility maximiser owns a car worth £60000£60000 and has a bank account with…

A: Car Worth = 60,000 Account balance = 20,000 50% chances that car will be stolen

Q: Monty Burns, the owner of the Springfield Nuclear Power Plant, owns many real estate properties. His…

A: Monty's Utility function : U(a) = w0.5 Miss b utility function : U(b) = y    (where , y = income )…

Q: 7. True or False: The certainty equivalent of a risk averse person is smaller than the expected…

A: Q7. Risk Averse is a person or investor who opt for guaranteed options rather than options in which…

Q: Define the term Aggregating Risk over time?

A: In financial terms, risk is defined as the chance that the actual gains from an outcome or…

Q: The project manager of Good Public Relations gatheredthe data shown in Table 7.15 for a new…

A: Expected duration for each activity =(a+4m+b)/6 Variance for each activity = {(b-a)/6}^2 Activity…

Q: What are the typical types of risk faced by a firm

A: Risk is a situation involving loss to the firm and lowers profits. There are majorly 5 types of risk…

Q: Suppose that Mary has a utility function U(W) = W power of 0.5. Her only asset is the shares in the…

A: Expected values are a way of evaluation of outcomes which are subject to probability.Expected…

Q: What is risk selection and discuss any 2 methods chat can be used to eliminate this.

A: Risk Selection  A related worry is risk selection, which occurs when insurers are incentivized to…

Q: Jonathan's utility of income is represented by: U(I) = V(311) %3D where I represents annual income.…

A: Given: U(I)=31I

Q: What is an insurance premium?

A: Insurance is a method that households and firms use to prevent any single event from having a…

Q: Economics Please help. I have been struggling with this question. showroom. He needs the dealership…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

Q: Does the risk correspond to the dispersion, or uncertainty, impossible outcomes?

A: Risk can be defined as the possibility of some bad experience. In financial terms, it can be…

Q: The risk that covers events like unexpected changes in the economy refers to: Select one: A. All of…

A: Risk is referred to as situation in which are chances of some unwanted outcome.

Q: True or False: No investments have risk. O True O False

A: Investments refer to a process in which a person or an entity purchases an asset in return for…

Q: U(I) = sqrt(161) I is annual income Job 1 has 0.3 of earning $24000 Job 2 has 0.7 of earning $57000…

A: Given : U(I)=sqrt(16l) The square root of 16 = 4

Q: Question: What are the equations for measuring return and risk?

A: Return and risk help us choose which investments to undertake. Returns are calculated based on the…

Risk and Uncertainty

Uncertainty refers to a situation when there is one possible outcome of a decision but where the probability of occurrence of each particular outcome is not known or cannot be estimated.