Quiz Space

Corporate Finance · Quiz 2 · 1 Dec 2024 · September 2024 term

Question 2: What would be the fair price of a bet that pays 2 with a …

Question 2

+1 markOne correct option

What would be the fair price of a bet that pays 2 with a 25% probability, pays 4 with a 50% probability and pays 8 with a 25% probability?

  1. A

    4

  2. B

    4.5

  3. C

    5

  4. D

    5.5

Show answer

Correct answer

  • B

    4.5

See the whole paperTake it as a mock test

Question 2 of 25 in the IIT Madras BS Corporate Finance (Corporate Finance) Quiz 2 paper sat on 1 Dec 2024, in the September 2024 term (IIT M DEGREE AN EXAM QDB2 01 Dec 2024). It carries 1 mark.

More questions from this paper

  1. Q1Figure question
  2. Q3Suppose a 1-year government bond is offering a 10% rate of return. Ankit has Rs 10,000, which he can invest in governme…
  3. Q4Axis Bank has assets of 1000 units, liabilities of 750 units and capital of 250 units. What is the leverage ratio for A…
  4. Q5There are two assets: a risk-free asset that offers a 5% rate of return and a risky asset that has an expected rate of …
  5. Q6An asset A has a correlation of 0.2 with the market and a standard deviation of 20%. If the market return has a standar…
  6. Q7Short selling refers to
  7. Q8You create a portfolio of 16 identical assets that have an expected return of 20% and a standard deviation of 20%. Thes…
  8. Q9Which of the following statements is incorrect?
  9. Q10If the utility function of an individual is a strictly concave function, the individual is
  10. Q11A borrower is called solvent if
  11. Q12A garment outlet can be worth 60 thousand in two years with a 25% probability or 150 thousand in two years with a 75% p…
  12. Q13Which of the following statements is correct?
  13. Q14At the optimal consumption point
  14. Q15Figure question
  15. Q16Figure question
  16. Q17What would be the appropriate promised rate of return that the creditor of the loan would demand?
  17. Q18What is the expected payoff for the equity owner in the next year?
  18. Q19What is Monica’s expected utility?
  19. Q20If Monica pays p for an insurance policy that would pay her 800 units if she suffered a severe injury, then she would b…
  20. Q21A portfolio is formed with 40% of wealth invested in Asset 1 and 60% of wealth invested in Asset 2. What would be the e…
  21. Q22What would be the standard deviation of the rate of return of the portfolio?
  22. Q23Suppose you would like to construct a portfolio with an expected rate of return of 15%. What weights would you put on A…
  23. Q24What are the weights of Asset 1 and Asset 2 in the minimum variance portfolio?
  24. Q25What is the expected rate of return of the minimum variance portfolio?