Question
In: Finance
Assume that the following probability distribution exists for automobile damages Possible Outcomes for Damages Probability $0...
Assume that the following probability distribution exists for automobile damages
| Possible Outcomes for Damages | Probability |
| $0 | 50% |
| 600 | 30% |
| 2,000 | 10% |
| 7,000 | 6% |
| 11,000 | 4% |
What is the expected value for damages?
A. $12.40
B. $124
C. 1,240
D. 12,400
Can someone please explain how you got the answer. I'm stuck
Solutions
Expert Solution
Expected Value = 
Possible outcomes * Probability
| Possible Outcomes | Probability | Probability*Possible Outcomes |
| - | 0.50 | - |
| 600 | 0.30 | 180.00 |
| 2,000 | 0.10 | 200.00 |
| 7,000 | 0.06 | 420.00 |
| 11,000 | 0.04 | 440.00 |
Expected Value =
Possible outcomes * Probability
= 0+180+200+420+440
= $1,240 (option C)
jeff jeffy answered 3 years agoRelated Solutions
Assume that a driver faces the following loss distribution: Loss 10,000 0 Probability .04 .96 These...
Assume that a driver faces the following loss distribution:
Loss 10,000 0
Probability .04 .96
These two drivers decide to pool their losses with two other
drivers with the same loss distribution, and all losses are not
correlated, i.e., independent.
6. What is the expected loss for each member of the pool?
7. What is the standard deviation of loss for each member of the
pool?
Now consider another group of four drivers who have formed a
separate pool, and...
You are considering investing in a project with the following possible outcomes: Probability of Investment States...
You are considering investing in a project with the following
possible outcomes:
Probability of
Investment
States Occurrence Returns
State 1: Economic boom 20% 16%
State 2: Economic growth 40%
12%
State 3: Economic decline 20%
5%
State 4: Depression 20%
-5%
Calculate the standard deviation of returns for this investment.
Round to the nearset hundredth percent. Answer in the percent
format. Do not include % sign in your answer (i.e. If your answer
is 4.33%, type...
Assume a random variable X with four possible outcomes {1,2,3,4}, each with the probability θ/2, θ/2,...
Assume a random variable X with four possible outcomes
{1,2,3,4}, each with the probability θ/2, θ/2, (1-θ)/3, and
(2-2θ)/3, respectively. We observe the following samples
{1,1,1,2,2,3,3,4,4,4}. Derive the maximum likelihood estimate of
θ.
You expect the following set of possible outcomes for a stock: Outcome Probability Ending Stock Price...
You expect the following set of possible outcomes for a
stock:
Outcome
Probability
Ending Stock Price
Holding Period Return
(Percent)
Risk-free rate
(Percent)
Good
35%
$120
44.5
4
Neutral
30%
$100
14
2
Bad
35%
$70
-16.5
.5
What is the variance of the risk-free rate? Please enter your
answer rounded to the third decimal place.
You expect the following set of possible outcomes for a stock: Outcome Probability Ending Stock Price...
You expect the following set of possible outcomes for a
stock:
Outcome
Probability
Ending Stock Price
Holding Period Return
(Percent)
Risk-free rate
(Percent)
Good
35%
$120
44.5
4
Neutral
30%
$100
14
2
Bad
35%
$70
-16.5
.5
What is the covariance of the stock holding period returns with
the stock's ending price? Please enter your answer rounded to the
third decimal place.
47. Ripken Iron Works believes the following probability distribution exists for its stock. What is the...
47. Ripken Iron Works believes the following probability
distribution exists for its stock. What is the coefficient of
variation on the company's stock?
State
Probability
Stock's
Of the
Economy
of State
Occurring
Expected Return
Boom
.25
25%
Normal
.50
15%
Recession
.25
5%
a.
0.4360
b.
0.4714
c.
0.5068
d.
0.5448
48. The excess return required from a risky asset over
that required from a risk-free asset:
A. risk premium
...
If a Normal distribution is assumed for the possible future outcomes, the Value at Risk (VaR)...
If a Normal distribution is assumed for the possible future
outcomes, the Value at Risk (VaR) is fairly straightforward and
simple to calculate if the mean and standard deviation are known.
True
False
A fairly accurate estimate of the Value at Risk (VaR) can be
determined by using the generally accepted assumption that daily
returns of the stock market as measured by the S&P 500 Index
are consistent with a Normal distribution.
True
False
The Value at Risk (VaR) tells...
What is the sum of the probabilities of all outcomes in a probability distribution? a. 0 b. 1/2 c. 1 d. It cannot be determined.
What is the sum of the probabilities of all outcomes in a probability distribution?a. 0b. 1/2c. 1d. It cannot be determined.
Create the probability distribution in a table for all the outcomes where X is the random...
Create the probability distribution in a table for all
the outcomes where X is the random variable representing the number
of points awarded. (already done)
Communicate how you arrived at the probability of each
outcome.
What is the expected value, E(X), for the game? You may
include this in your table from the distribution. If the game costs
10 points to play, how much would the player expect to win or
lose?
Three Prize roller
Outcome
x
P(x)
xP(X)
1...
Q1.Ripken Iron Works believes the following probability distribution exists for its stock. What is the standard...
Q1.Ripken Iron Works believes the following
probability distribution exists for its stock. What is the standard
deviation of return on the company's stock? Enter your answer
rounded to two decimal places. Do not enter % in the answer box.
For example, if your answer is 0.12345 or 12.345% then enter as
12.35 in the answer box.
State of the Economy
Probability of State Occurring
Stock's Expected Return
Boom
0.25
35%
Normal
0.45
13%
Recession
0.30
-26%
Q2. Joel Foster is...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- How Can Hominin Evolution be characterized as " mosaic evolution" Use examples of species from the...
- Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of...
- Mobile and wireless devices are being increasingly used in the Business Administration and Management Industry. write...
- What are the options that might be considered in relation to introducing flexible work practices? What...
- Question 2 : Aggregate Scores: Write a program that opens 2 files, quiz.txt, and hw.txt. The...
- Define the term symbiosis specifically as it applies in a biological context. Compare and contrast parasitism,...
- A research team conducted a study showing that approximately 20% of all businessmen who wear ties...
ADVERTISEMENT