Elizabeth, the manager of the medical test firm Theranos, worries aboutthe firm being sued for botched results from blood tests. If it isn’t sued, thefirm expects to earn profit of $120, but if it is successfully sued, its profit will beonly $10. Elizabeth believes that the probability of a successful lawsuit is 20%.If fair insurance is available and Elizabeth is risk averse, how much insurancewill she buy? (Hint: Assume that Elizabeth starts with a wealth ofwand shebuys insurance coveringx≤(120−10) = 110 of her loss. Write down herexpected utility as a function ofxand then take a derivative with respect toxto find the optimal insurance. If you want more hints, have a look at the secondinsurance problem solved in the lecture notes.)
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Ответ:
Answer for the question :
Elizabeth, the manager of the medical test firm Theranos, worries aboutthe firm being sued for botched results from blood tests. If it isn’t sued, thefirm expects to earn profit of $120, but if it is successfully sued, its profit will beonly $10. Elizabeth believes that the probability of a successful lawsuit is 20%.If fair insurance is available and Elizabeth is risk averse, how much insurancewill she buy? (Hint: Assume that Elizabeth starts with a wealth ofwand shebuys insurance coveringx≤(120−10) = 110 of her loss. Write down herexpected utility as a function ofxand then take a derivative with respect toxto find the optimal insurance. If you want more hints, have a look at the secondinsurance problem solved in the lecture notes.)"
is explained in attachment.
Explanation:
Ответ:
ROI (return on investment) is a ratio the measures the amount of return for your investment. The calculation is (net return) / (net investment). In this case net return is the dividends and the cost is the price of the stock. So... (.75)/(16.49)= 4.5% return on investment.