FAH101H1 Quiz: ECON 1540 math2 quiz 1 sec O w13ans.pdf

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yellowantelope480

27 Feb 2014

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Question 1: in scenario a, the dimension of matrix ________ is (a) _____ (b) _____ (c) ______ (d) ______ (e) none of the above. Question 2: in scenario a, the element ________ of matrix _______ is (a) _____ (b) _____ (c) ______ (d) ______ (e) none of the above. Question 3: in scenario a, the dimension of the sum ________ is (a) _____ (b) _____ (c) ______ (d) ______ (e) none of the above. Question 4: in scenario a, the element ________ in the sum matrix ________ is (a) _____ (b) _____ (c) ______ (d) ______ (e) none of the above. Question 5: in scenario a, the dimension of the product matrix ________ is (a) _____ (b) _____ (c) ______ (d) ______ (e) none of the above. Question 6: in scenario a, the element _______ of the product matrix _______ is (a) _____ (b) _____ (c) ______ (d) ______ (e) none of the above.

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Problem 5. Determine which of the following matrices are in reduced form. 110 -4 0 0 A=1 01 10 09 0 0 0 1 3 /1 0 01 B=1 0 0 12 0 1 0 3 1 C= /10 -4 03 0 0 0 12 0 0 0 18 A) Matrices A and C only; B) Matrix A only; C) All three matrices. D) Matrix B only; E) Matrices A and B only; F) none of these.

Paul wants to choose one of the two investment opportunitiesover three possible scenarios. Investment 1 will yield a return of$10,000 in Scenario 1, $2,000 in Scenario 2, and a negative returnof -$5,000 in Scenario 3. Investment 2 will yield a return of$6,000 in Scenario 1, $4,000 in Scenario 2, and zero in Scenario 3.The probability for Scenario 1 is 0.2, for Scenario 2 is 0.3, andfor Scenario 3 is 0.5.

Question 1 of 2

5.0 Points

If you were to choose the investment that maximizes Paul's ExpectedMoney Value (EMV), then you should choose __________.

A.Investment 1
B.Investment 2
C.Indifferent

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Question 2 of 2

5.0 Points

If Paul is uncertain about the return for Investment 1 in Scenario1, then this return has to be dollars in order to make Paulindifferent between these two investments (i.e. the two investmentswould have the same EMV.) (Please only enter an integer and includeno units.)
Mark for Review What's This?

cyanhamster204

Consider the following two scenarios for the economy and the returns in each scenario for the market portfolio, an aggressive stock A, and a defensive stock D.

Rate of Return (%) Scenario

Scenario

Bust: Market -7 / Aggressive Stock A -9 / Defensive Stock D -5

Boom: Market 28 / Aggressive Stock A 35 / Defensive Stock D 20

a) Find the beta of each stock. In what way is stock D defensive?

b) If each scenario is equally likely, find the expected rate of return on the market portfolio and on each stock.

c) If the T-bill rate is 4%, what does the CAPM say about the fair expected rate of return on the two stocks?

d) Which stock seems to be a better buy on the basis of your answers to (a) through (c)?

coffeepig991

FAH101H1 Quiz: ECON 1540 math2 quiz 1 sec O w13ans.pdf

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