skip to Main Content
The smarter way
to do assignments.

Please note that this is just a preview of a school assignment posted on our website by one of our clients. If you need assistance with this question too, please click on the Order button at the bottom of the page to get started.

Answer the following 3 questions. (2 multiple choices and 1 essay question) For the multiple choice questions, you need to EXPLAIN YOUR ANSWER IN WORDS. For the essay question, no words limited , just fully answer it should be good, I need it in 10 hours.
1. Both Nadia and Samantha are applying to insure their car against theft. Nadia lives in a secure neighborhood, where the probability of theft is 10%. Samantha lives in a lesser secure neighborhood where the probability of theft is 25%. Both Nadia and Samantha own cars worth $10,000, and are willing to pay $100 over expected loss for insurance. Suppose the insurance company cannot tell them apart but expects them to be different values and charges them an average premium of $1850. How much profit would it make?
A. 1850 B. Zero-they would break even C. They would make a loss of $650 D. They would make a loss of $1100
2. Relative to a manager of a company owned store, a franchisee is more likely to 
A. Work very hard B. Not work as hard C. Work only evenings D. Work only night shifts
3. Suppose that, as an owner of a federally insured S&L in the 1980s, the price of real estate falls, and most of your loans go into default. In fact, so many loans go into default that the net worth of the S&L is negative ($5 million). Federal regulators haven’t realized this yet, but they will shortly. As a last-ditch attempt to save the bank, you attract $1 million in new deposits with very generous interest rates to depositors. You have two possible investments you can make with the $1 million. You can invest in the stock market, which will pay $4 million with probability 0.5 and $2 million with probability 0.5. Alternatively, you can invest in junk bonds, which pay off $10 million with probability 0.1 and $0.5 million with probability 0.9. 
(a) Which investment has the highest expected value to ordinary investor? 
(b) Which investment has the highest expected value to S&L owner? [Hint: Federal deposit insurance limits an S&L’s losses to zero.]

GET HELP WITH THIS ASSIGNMENT TODAY

Clicking on this button will take you to our custom assignment page. Here you can fill out all the additional details for this particular paper (grading rubric, academic style, number of sources etc), after which your paper will get assigned to a course-specific writer. If you have any issues/concerns, please don’t hesitate to contact our live support team or email us right away.

How It Works        |        About Us       |       Contact Us

© 2018 | Intelli Essays Homework Service®