1. A financial institution has the following portfolio of options a stock:

In EXCEL file answer the questions below,

An option is available with a delta of 0.5, a gamma of 2, and a vega of 1.5.

(a) What position in the traded option and in the stock would make the portfolio both gamma neutral and delta neutral?

(b) What position in the traded option and in the stock would make the portfolio both vega neutral and delta neutral?

(c) Another option with a delta of 0.2, a gamma of 0.5, and a vega of 1 is available. How could the portfolio become delta, gamma, and vega neutral?

The Red Hen company is launching its new food for sale in supermarkets throughout Michigan. The sales department is convinced that its spicy chicken soup will be a great success. The marketing department is considering an intensive advertising campaign. The advertising campaign will cost $2,000,000 and if successful produce $9,600,000 in added revenue. If the campaign is less successful (25% chance), the added revenue is estimated at only $3,600,000. If no advertising is used, the revenue is estimated at $7,000,000 with probability 0.7 if customers are receptive and $3,000,000 with probability 0.3 if they are not.

Question- Should Red Hen invest in an intensive advertising campaign?

1 point) If xx is a binomial random variable, compute P(x)P(x) for each of the following cases:

(a)  P(x≤1),n=5,p=0.3P(x≤1),n=5,p=0.3

P(x)=P(x)=

(b)  P(x>3),n=4,p=0.1P(x>3),n=4,p=0.1

P(x)=P(x)=

(c)  P(x<3),n=7,p=0.7P(x<3),n=7,p=0.7

P(x)=P(x)=

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:

Required:

1-a. Compute the throughput time for each month. (Round your answers to 1 decimal place.)

1-b. Compute the manufacturing cycle efficiency (MCE) for each month. (Round your answers to 1 decimal place.)

1-c. Compute the delivery cycle time for each month. (Round your answers to 1 decimal place.)

3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE. (Round your answers to 1 decimal place.)

3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE. (Round your answers to 1 decimal place.)

A 200-lb man walks up an inclined plank of negligible weight which makes an angle of 70o with the wall. The coefficient of static friction between the floor and the ladder is 0.3 and that between the ladder and the wall is 0.2. When the man is at a horizontal distance X from the foot of the plank, the plank would begin to slide. (a) Draw a complete FBD of the system. Find (b) the frictional force on the floor, (b) the frictional force on the wall and (c) the horizontal distance X

You are conducting a multinomial Goodness of Fit hypothesis test for the claim that the 4 categories occur with the following frequencies:

HoHo : pA=0.4pA=0.4;  pB=0.2pB=0.2;  pC=0.1pC=0.1;  pD=0.3

What is the chi-square test-statistic for this data?
χ2

For significance level alpha 0.025, what is the chi-square Critical Value?

1. In the following regression, “drive” is a dummy indicating a person owns a personal vehicle, “employed” is a dummy indicating a person is employed, “age” is a person’s age, and “married” is a dummy indicating a person is married:

drive=0.3+0.2 employed+0.003 age+0.4 married

The command in STATA is: reg drive employed age married

1. Interpret the coefficient 0.2 on employed.  

2. Predict the probability of owning a vehicle for a person who is employed, 60 years of age and married.  

Drive=.3+.2(1)+.003(60)+.4(1)=1.08

3. The answer you got from the previous question is actually greater than 1. Explain why that is.  

Will you be able to test the significance of the coefficients if you were given all the standard errors and/or p-values? Say “yes” or ‘no”, then explain.