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NEW QUESTION: 1
You can enter a derivative contract that will pay $100 at the end of a year if the price of corn exceeds
$ 3 per bushel, or $50 if it is equal to $3 per bushel or lower. The probability that corn will exceed $3 by the end of one year is 50%. The current price of the contract is $60, and interest is 5% per year. What is the optimal strategy?
A. Invest $60 at 5% until the end of the year.
B. Buy $3 per bushel worth of corn futures.
C. Enter into the derivative contract for a cost of $60.
Answer: C
Explanation:
Enter into the derivative contract for a cost of $60, for the expected payoff is 0.50 * $100 +
0 .50 * $50 = $75. That is a 25% return on your investment in one year, greater than the 5% that could be made by investing the $60 at interest. This is an example of the investment consequences of inconsistent probabilities. The present value of the contract should be $75/1.05 = $71.43. Thus, an arbitrage opportunity is present. On an expected value basis, you can buy an asset worth $71.43 for only $60.

NEW QUESTION: 2
You are the business analyst for your organization and are working with Virginia on the allocation of requirements for a new solution. You have assigned Virginia the task of breaking down the solution scope into smaller components for allocation. What technique have you asked Virginia to complete in this scenario?
A. Business rules analysis
B. Process modeling
C. Decision analysis
D. Functional decomposition
Answer: D

NEW QUESTION: 3


A. Option B
B. Option A
C. Option D
D. Option C
Answer: B
Explanation:
Explanation
Source should be AppSource:
* New-EventLog
Creates a new event log and a new event source on a local or remote computer.
Parameters include:
-Source<String[]>
Specifies the names of the event log sources, such as application programs that write to the event log. This parameter is required.

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