Problem 20-6

Suppose you think Apple stock is going to appreciate substantially in value in the next year. Say the stock’s current price, S₀, is $40, and a call option expiring in one year has an exercise price, X, of $40 and is selling at a price, C, of $15. With $15,000 to invest, you are considering three alternatives.

a. Invest all $15,000 in the stock, buying 375 shares.

b. Invest all $15,000 in 1,000 options (10 contracts).

c. Buy 100 options (one contract) for $1,500, and invest the remaining $13,500 in a money market fund paying 6% in interest over 6 months (12% per year).

What is your rate of return for each alternative for the following four stock prices in 6 months? (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Round the "Percentage return of your portfolio (Bills + 100 options)" answers to 2 decimal places.)
    

The total value of your portfolio in six months for each of the following stock prices is:

  Prices of Stock 6 Months from Now

The percentage return of your portfolio in six months for each of the following stock prices is:

Price of Stock 6 Months from Now

1. Suppose that David has the following utility function over consumption level c:

U(c) = √c (that’s the square root of c)

Also, suppose David has wealth $1000, but faces the risk of a financial loss $500 with probability 0.2 (20% chance). He does not save anything (he consumes all the wealth he can).

Now suppose that David has a choice of insuring his potential losses. The insurance policy pays him $0 if he does not have financial loss and pays him $500 if he does have loss.

1. Describe intuitively why David will value insurance.
2. What would the actuarially fair price for this insurance policy be?
3. Suppose the price of the insurance policy is $100. What is David’s expected utility if he buys insurance?
4. Will David buy the insurance at a price of $100?
5. Now suppose the price of insurance is $300. What is David’s expected utility if he buys insurance now?
6. Will David buy the insurance at a price of $300?

2 Suppose the following are the supply and demand schedules for rice in India.

Demand Schedule for Rice

Supply Schedule for Rice

1. Graph this market on a clearly labeled supply-demand diagram. Is there an equilibrium? If yes, what are the price and quantity? If no, please describe the relationship between quantity supplied and quantity demanded

2. Use the arc elasticity formula (i.e. the formula used in class to calculate percentage changes) to calculate the elasticity of demand and supply between each of the prices. Show your work.

3. Suppose an improved technology increases the capacity of the Indian rice market such that at each price the market can supply 300 more pounds per week at each price. Please re-evaluate your answer to part a.

A 5-year bond with a yield of 10% (continuously compounded), with a face value of $100, pays an 10% coupon at the end of each year.

What is the bond’s price?

A 5-year bond with a yield of 10% (continuously compounded) pays an 10% coupon at the end of each year.

What is the bond’s duration?

A 5-year bond with a yield of 10% (continuously compounded),   with a face value of $100, pays an 10% coupon at the end of each year.

Use the duration from the previous question to calculate the effect on the bond’s price of a 0.1% decrease in its yield. What is the new bond price?

(Remember if the yield goes down what happens to the the bond price?)

A 5-year bond with a yield of 10% (continuously compounded) pays an 10% coupon at the end of each year.

Check the results from your previous duration calculation the long way.  Recalculate the bond’s price on the basis of a 9.9% per annum yield and verify that the result is in agreement with your answer to the previous question.

JS Bin / Tax Calculator / using HTML | CSS | JavaScript

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How can I edit the JavaScript below so that when the calculate button is clicked the total price only shows two decimal places by using the toFixed() method?

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JavaScript:

// Variables
var tax = "tax"; // Tax percentage
var taxRate = document.getElementById('tax'); // Selecting tax element

// On the time of loading the DOM we are setting the tax rate
window.addEventListener('DOMContentLoaded', (event) => {
taxRate.value = tax;
});

// Calculate button
var btn = document.getElementById('calculate');

btn.addEventListener('click', (event) => {
// Stopping form to submit data
event.preventDefault();
  
// Selecting dom elements
var quantity = document.getElementById('quantity').value;
var price = document.getElementById('price').value;
var discount = document.getElementById('discount').value;
var total = document.getElementById('total');
  
// Calculating the total price
var totalPrice = quantity * price;
var totalTax = (totalPrice * taxRate.value) / 100;
var totalDiscount = (totalPrice * discount) / 100;
var finalPrice = totalPrice + totalTax - totalDiscount;

// Setting the total amount
total.value = finalPrice;

});

Mrs. Burwell is a 61-year-old black female with type 2 diabetes, hypertension, and obesity. She lives with her husband of 35 years and maintains a moderate amount of activity. Because their children are grown, many meals are consumed at restaurants. In the past, she has been unsuccessful in maintaining any weight losses. Her family history for coronary heart disease is positive. Her height is 5’4” and her weight is 250 lbs. Her medications are Diabenase (an oral diabetes medication that helps to control blood sugar levels), Dyazide (a water pill used to treat fluid retention and hypertension), Avapro (an ARB [angiotensin II receptor blocker] used to treat high blood pressure), and Premarin (conjugated estrogens, a drug used to treat the symptoms of menopause). At her check-up, the lab tests reveal: Triglycerides: 400 mg/dl (normal = <150 mg/dl) HDL cholesterol: 37 mg/dl (normal = >60 mg/dl) Fasting blood glucose: 178 mg/dl (normal = 70 – 100 mg/dl) Hemoglobin A1C: 7.8% (normal = <5.7% Total cholesterol: 253 mg/dl (normal = <200 mg/dl) LDL cholesterol: 185 mg/dl (normal = <100 mg/dl) a. What are Mrs. Burwell’s risk factors for coronary heart disease? b. What type of diet would you recommend for Mrs. Burwell? What additional information needs to be obtained before teaching about a new eating plan? c. What suggestions for restaurant eating will help Mrs. Burwell adhere to her new eating plan?

1. From the data shown in the table below about demand for smart phones, calculate the price elasticity of demand (using the arc method) from: 1.1. Point B to point C 1.2. Point D to point E 1.3. Point G to point H Classify the elasticity at each point as elastic, inelastic or unit elastic. Points P Q A 60 3,000 B 70 2,800 C 80 2,600 D 90 2,400 E 100 2,200 F 110 2,000 G 120 1,800 H 130 1,600 2. From the data shown in the table below about supply of alarm clocks, calculate the price elasticity of supply from: 2.1. point J to point K 2.2. point L to point M 2.3. point N to point P. Point Price Quantity Supplied J $8 50 K $9 70 L $10 80 M $11 88 N $12 95 P $13 100 2 Classify the elasticity at each point as elastic, inelastic, or unit elastic. 3. The federal government decides to require that automobile manufacturers install new anti-pollution equipment that costs $2,000 per car. Under what conditions can carmakers pass almost all of this cost along to car buyers? Under what conditions can carmakers pass very little of this cost along to car buyers? Show it graphically. 4. Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. 4.1. If the elasticity of demand for your company’s product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? 4.2. What if the elasticity were 0.6? 4.3. What if it were 1? Explain your answer. 5. The average annual income rises from $25,000 to $38,000, and the quantity of bread consumed in a year by the average person falls from 30 loaves to 22 loaves. What is the income elasticity of bread consumption? Is bread a normal or an inferior good? 6. Suppose the cross-price elasticity of apples with respect to the price of oranges is 0.4, and the price of oranges falls by 3%. What will happen to the demand for apples? 7. Transatlantic air travel in first class has an estimated elasticity of demand of 0.40 less than transatlantic air travel in economy class, with an estimated price elasticity of 0.62. Why do you think this is the case? 8. The equation for a demand curve is P = 2/Q. 8.1. What is the elasticity of demand as price falls from 5 to 4? 8.2. What is the elasticity of demand as the price falls from 9 to 8? Would you expect these answers to be the same

1. Number guessing Game

Write a C program that implements the “guess my number” game. The computer chooses a random number using the following random generator function

srand(time(NULL));

int r = rand() % 100 + 1;

that creates a random number between 1 and 100 and puts it in the variable r. (Note that you have to include <time.h>) Then it asks the user to make a guess. Each time the user makes a guess, the program tells the user if the entered number is larger or smaller than its number. The user then keeps guessing till he/she finds the number.

If the user doesn’t find the number after 10 guesses, a proper game over message will be shown and the actual guess is revealed. If the user makes a correct guess in its allowed 10 guesses, then a proper message will be shown and the number of guesses the user made to get the correct answer is also printed.

After each correct guess or game over, the user decides to play again or quit and based on the user choice, the computer will make another guess and goes on or prints a proper goodbye message and quits A sample run is as follows (user inputs are in red):

Welcome to the Number Guess Game!
I choose a number between 1 and 100 and you have only 10 chanced to guess it!

OK, I made my mind!

What is your guess? > 5

My number is larger than 5!

9 guesses left.

What is your guess? > 75

My number is smaller than 75!

8 guesses left.

What is your guess? > 40

My number is smaller than 40!

7 guesses left.

What is your guess? > 23

My number is larger than 23!

6 guesses left.

What is your guess? > 30

My number is larger than 30!

5 guesses left.

What is your guess? > 35

You did it! My number is 35!
You found it with just 6 guesses.

Do you want to play again? (Y/N) > Y

OK, I made my mind!

What is your guess? > 15

My number is larger than 15!

9 guesses left.

…

And if the user makes 10 guesses without a success

…

What is your guess? > 405

Please enter a number between 1 and 100

What is your guess? > 45

My number is larger than 45!

1 guess left.

What is your guess? > 47

SORRY! You couldn’t find it with 10 guesses!

My number was 46. Maybe next time!

Do you want to play again? (Y/N) > N

Thanks for playing! See you later.

1.Prompts the user for a positive integer >= 0

2.Validates the user input to ensure it is a positive integer >= 0

3.Allocate (dynamically) an array big enough for the data.

4.Load the array with random numbers ranging in value from1 to 100

5.Display the elements of the array (unsorted)

6.Display the elements of the array (sorted)

7. Display the average

8.Display the median

9.Display the mode, if none, display appropriate message

#include <iostream>
#include <stdlib.h> /* srand, rand */
#include <time.h> /* time */
using namespace std;

// Function prototypes
double median(int *, int);
int mode(int *, int);
int *makeArray(int);
void loadNumberData(int *, int);
void selectionSort(int [], int);
double average(int *, int);
void displayArray(int * numberData, int qtyOfRandomNumbers);
void validateInt(string userIn, int& userInput);

int main()
{
  
}

//function definitions

//*************************************************
//function displayArray
//this function displays the elements of the array
//use pointer arithmetic to step through the array

//*************************************************
//function validateInt ensures that the user input
//is an integer >= 0

//*************************************************
// Function makeArray *
// This function dynamically allocates an array of*
// ints and returns a pointer to it. The parameter*
// size is the number of elements to allocate. *
//*************************************************

//*************************************************
// Function loadNumberData *
// This function loads the array with random numbers*
//ranging in value from 1 to 100
//use pointer arithmetic to step through the array *
//*************************************************

//*************************************************
// Function selectionSort *
// This function performs the selection sort *
// algorithm on array, sorting it into ascending *
// order. The parameter size holds the number of *
// elements in the array. *
//*************************************************

//**************************************************
// Function median *
// This function displays the median of the values *
// in the array pointed to by the parameter arr. *
// The num parameter holds the number of elements *
// in the array. *
//**************************************************

//*********************************************************
// Function mode *
// This function returns the mode of the array pointed to *
// by arr. The mode is the value that appears most often. *
// The parameter num holds the number of elements in the *
// array. If no element appears more than once, the *
// function returns -1. *
//*********************************************************

//**************************************************
// Function average *
// This function calculates and returns the average*
// of the values in the array arr. num is the *
// number of elements in the array. *
//**************************************************

Microsoft announced huge profits and its first-ever dividend, but its stock price dropped. Why?