You have $1,000 to invest and are considering buying some combination of the shares of two companies, DonkeyInc and Elep
Posted: Fri Jul 01, 2022 7:41 am
You have $1,000 to invest and are considering buying somecombination of the shares of two companies, DonkeyInc andElephantInc. Shares of DonkeyInc will pay a return of 12 percent ifthe Democrats are elected, an event you believe to have a 40percent probability; otherwise the shares pay a zero return. Sharesof ElephantInc will pay 10 percent if the Republicans are elected(a probability of 60 percent), zero otherwise. Either the Democratsor the Republicans will be elected.
d. Devise an investment strategy that is riskless, that is,one in which the return on your $1,000 does not depend at all onwhich party wins.Instructions: Enter yourresponses rounded to two decimal places.You should invest $ in ElephantIncand $ in DonkeyInc.
e. Using the investment strategy devised in part d,you will earn % regardless of which party wins. PLEASEANSWER THIS PART SPECIFICALLY!!!!!!!!!!!!!
d. Devise an investment strategy that is riskless, that is,one in which the return on your $1,000 does not depend at all onwhich party wins.Instructions: Enter yourresponses rounded to two decimal places.You should invest $ in ElephantIncand $ in DonkeyInc.
e. Using the investment strategy devised in part d,you will earn % regardless of which party wins. PLEASEANSWER THIS PART SPECIFICALLY!!!!!!!!!!!!!