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  3. name: a#: q1. meghan's endowed with mo = $1000 the

Name: A#: Q1. Meghan's endowed with mo = $1000 the current period (t=0) and m...

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Name: A#: Q1. Meghan's endowed with mo = $1000 the current period (t=0) and m = $50 in the next period (t=1). Suppose the risk-free interest rate is 10%. Her current bundle of consumption is : Co=549 and Ci=514. However, her desired (optimal) consumption in the next period is 531. She now discovers three investment opportunities. Project A is a risk-free project that needs initial investment of $1000 and it generates $1150 in the next period. Project B is another risk-free project that needs initial investment of $500 and it generates $530 in the next period. Project C is a risk-free project that needs initial investment of $225 and it generates $230 in the next period. Can Meghan improve her consumption in the current period? What is her optimal consumption path now? (choose the closest answer) A. Yes she can, Co=567 and Ci=531. B. Yes she can, Co=608.18 and Ci=531. C. No, her consumption bundle remains unchanged Co=549 and Ci=514. D. Yes she can, Co=608.18 and C1=45.45. Name: A#: Q1. Meghan's endowed with mo = $1000 the current period (t=0) and m = $50 in the next period (t=1). Suppose the risk-free interest rate is 10%. Her current bundle of consumption is : Co=549 and Ci=514. However, her desired (optimal) consumption in the next period is 531. She now discovers three investment opportunities. Project A is a risk-free project that needs initial investment of $1000 and it generates $1150 in the next period. Project B is another risk-free project that needs initial investment of $500 and it generates $530 in the next period. Project C is a risk-free project that needs initial investment of $225 and it generates $230 in the next period. Can Meghan improve her consumption in the current period? What is her optimal consumption path now? (choose the closest answer) A. Yes she can, Co=567 and Ci=531. B. Yes she can, Co=608.18 and Ci=531. C. No, her consumption bundle remains unchanged Co=549 and Ci=514. D. Yes she can, Co=608.18 and C1=45.45

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