Business, 24.05.2021 14:00 averylivinglife2041

Sam is considering two investment strategies. The first strategy involves putting all of his available funds in Project X. If Project X succeeds, he will receive a $30,000 return, and if it fails, he will suffer a $20,000 loss. There is a 90% chance Project X will succeed and a 10% chance it will fail. The second strategy involves diversification: investing half of his funds in Project X and half of his funds in Project Y (which has the same payoff structure as Project X).

If both projects succeed, he will receive a $15,000 return from Project X and a $15,000 return from Project Y, for a net gain of $30,000.
If both projects fail, he will suffer a $10,000 loss on Project X and a $10,000 loss on Project Y, for a net loss of $20,000.
If one project succeeds and one fails, he will receive a $15,000 return from the successful project and will suffer a $10,000 loss on the failed project, for a net gain of $5,000.

As with Project X, there is a 90% chance that Project Y will succeed and a 10% chance that it will fail. Assume that the outcomes of Project X and Project Y are independent. That is, the success or failure of Project X has nothing to do with the success or failure of Project Y.

The expected payoff from the first strategy (investing everything in Project X) is :

Suppose Sam chooses the second strategy, which is putting half of his funds in Project X and half into Project Y. The probability that both projects will succeed is , the probability that both projects will fail is and the probability that one project will fail and one project will succeed is

Answers: 2

Show answers

Another question on Business

Business, 21.06.2019 21:20

Trinity coatings company uses the indirect method to prepare its statement of cash flows. refer to the following information for 2018: the beginning balance in the cash account was $ 3 comma 000. net cash provided by operating activities: $ 42 comma 000 net cash used for investing activities: $(26 comma 500) net cash provided by financing activities: $ 1 comma 700 the statement of cash flows will show

Answers: 2

Answer

Business, 22.06.2019 13:40

After much consideration, you have chosen cancun over ft. lauderdale as your spring break destination this year. however, spring break is still months away, and you may reverse this decision. which of the following events would prompt you to reverse this decision? a. the marginal cost of going to cancun decreases.b. the marginal cost of going to ft. lauderdale decreases.c. the marginal benefit of going to cancun increases.d. the marginal benefit of going to ft. lauderdale decreases.

Answers: 2

Answer

Business, 22.06.2019 16:50

Atrough in the business cycle occurs when

Answers: 1

Answer

Business, 22.06.2019 17:30

Jeanie had always been interested in how individuals and businesses effectively allocate their resources in order to accomplish personal and organizational goals. that’s why she majored in economics and took on an entry-level position at an accounting firm. she is very interested in further advancing her career by looking into a specialization that builds upon her academic background, and her interest in deepening her understanding of how companies adjust their operating results to incorporate the economic impacts of their practices on internal and external stakeholders. which specialization could jeanie follow to get the best of both worlds? jeanie should chose to get the best of both worlds.

Answers: 2

Answer

You know the right answer?

Sam is considering two investment strategies. The first strategy involves putting all of his availab...

Questions