Question
In: Economics
A real estate investor buys two properties. Monthly net income from the first property (an apartment...
A real estate investor buys two properties. Monthly net income from the first property (an apartment building) is $1,000 times the number of apartments that are rented out, minus $1,800 in property taxes and maintenance expenses. The number of apartments that are rented out is a random variable, X, with mean 20 and standard deviation 3. Monthly net income from the second property (a parking lot) is ninety percent of revenue (the management company takes the other ten percent), minus $1,200 in property taxes and maintenance. Revenue is a random variable, Y, with mean $20,000 and standard deviation $200. The correlation between the number of apartments rented out (X) and revenue from the parking lot (Y) is 0.4.
a. Calculate the real estate investor’s expected monthly net income from these two properties:
b. Compute the covariance from the correlation:
c. Calculate the variance of monthly net income from these two properties
Solutions
Rahul Sunny answered 7 months agoRelated Solutions
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Can you show the work. Thanks
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Strassel Investors
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property is available, and Bud Strassel, the president and owner of
Strassel Investors, believes if he purchases and develops this
property, it can then be sold for $160,000. The current property
owner has asked for bids and stated that the property will be sold
for the highest bid in excess of $100,000. Two competitors will be
submitting bids for the property. Strassel does not know...
Strassel Investors buys real estate, develops it, and resells it for a profit. A new property...
Strassel Investors buys real estate, develops it, and resells it
for a profit. A new property is available, and Bud Strassel, the
president and owner of Strassel Investors, believes if he purchases
and develops this property it can then be sold for $160,000. The
current property owner has asked for bids and stated that the
property will be sold for the highest bid in excess of $100,000.
Two competitors will be submitting bids for the property. Strassel
does not know...
Strassel Investors buys real estate, develops it, and resells it for a profit. A new property...
Strassel Investors buys real estate, develops it, and resells it
for a profit. A new property is available, and Bud Strassel, the
president and owner of Strassel Investors, believes if he purchases
and develops this property it can then be sold for $160,000. The
current property owner has asked for bids and stated that the
property will be sold for the highest bid in excess of $100,000.
Two competitors will be submitting bids for the property. Strassel
does not know...
Strassel Investors buys real estate, develops it, and resells it for a profit. A new property...
Strassel Investors buys real estate, develops it, and resells it
for a profit. A new property is available, and Bud Strassel, the
president and owner of Strassel Investors, believes if he purchases
and develops this property it can then be sold for $160,000. The
current property owner has asked for bids and stated that the
property will be sold for the highest bid in excess of $100,000.
Two competitors will be submitting bids for the property. Strassel
does not know...
Strassel Investors buys real estate, develops it, and resells it for a profit. A new property...
Strassel Investors buys real estate, develops it, and resells it
for a profit. A new property is available, and Bud Strassel, the
president and owner of Strassel Investors, believes if he purchases
and develops this property it can then be sold for $160,000. The
current property owner has asked for bids and stated that the
property will be sold for the highest bid in excess of $100,000.
Two competitors will be submitting bids for the property. Strassel
does not know...
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