Question

QUESTION 5 Mike invested $3000 in IBM paying 6% interest rate a year. Using the rule 72, how long will it take to double Mike's investment? QUESTION 6 Suppose you invested $4000. The expected payoffs are provided in the following table: Case Scenario Payoff 1 $4500 2 $3800 3 $4700 What is the value at risk? Hint: compute the return for each case scenario (return - Payoff - Initial Investment).

Answer 1

(1 Answer: Summarized the info omation given in the question mike invested $3000 'n IBM---- Given data; mike invested $3000 - intefest rate 6% PIA how long take to double - ? Rule 72 72 12 years Y= year o= interest rate. Y = Q amike invested $3000 double $6000 12 years. 6 in 6 Given data, = value of risk = ? → Retuon - Payoff Initial investment. Initial investment = $ 4000 $ 4500 - Pay off Case 1 Case-2 – 8 case-3 $ 3800 $.4700

7 Return case-1 = 4500 - 4000 = $500 Case-2 3800 - 4000 ($200) Case-3 = 4700 4000 $700 Total betuon $1000 > (mean/average) Geturna $1000 = $ 333.33 => Variance (X-se} = Case-1 = 500-333.33) 27778.88 Case-&= (-200-333-33)? 284440.88 case-3 700-333-33) = 134446.38 $ 446666.65 148888.88 446666.65 3 14888888 SD = = $385.86 Please please kindly up-vote. It helps me a lot. Thank you