I really need help finding the price of each security if purchased 1,000 games and...

70.2K

Verified Solution

Question

Finance

image

I really need help finding the price of each security if purchased 1,000 games and sold 20,000 whith in a six month period. This is the bullet point 3 that I am really struggling with. Allais' Paradox In 1953, a French economist named Maurice Allais published the results of several behavioral economics studies. One of the experiments involved a choice between two games. Game 1 Game 2 Probability Outcome Probability Outcome 0.1 $5M 0.89 $1M 1.0 $1M ??? $0 Complete the following analyses and discussion items: Find the expected outcome for each game and the standard deviation of outcomes Choose between the two games and explain your choice in the context of risk. Address how your choice compares to traditional economic theory where individuals are assumed to be risk averse. Suggestion: Find a statistical metric that gives a risk-adjusted return. Suppose that the game is to be played six months from today. If you purchased 1,000 games and sold 20,000 securities on it, what would be the price of each security? Make this computation for both games. Note, the risk-free rate is 2.5%. Explain this process and how it contributes to capital market efficiency, and in particular, liquidity. I really need help finding the price of each security if purchased 1,000 games and sold 20,000 whith in a six month period. This is the bullet point 3 that I am really struggling with. Allais' Paradox In 1953, a French economist named Maurice Allais published the results of several behavioral economics studies. One of the experiments involved a choice between two games. Game 1 Game 2 Probability Outcome Probability Outcome 0.1 $5M 0.89 $1M 1.0 $1M ??? $0 Complete the following analyses and discussion items: Find the expected outcome for each game and the standard deviation of outcomes Choose between the two games and explain your choice in the context of risk. Address how your choice compares to traditional economic theory where individuals are assumed to be risk averse. Suggestion: Find a statistical metric that gives a risk-adjusted return. Suppose that the game is to be played six months from today. If you purchased 1,000 games and sold 20,000 securities on it, what would be the price of each security? Make this computation for both games. Note, the risk-free rate is 2.5%. Explain this process and how it contributes to capital market efficiency, and in particular, liquidity

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students