An individual is considering investing in either the stock market, the bond market or a fully-insured bank account (i. e. zero risk) which offers a return of 4%. The individual has identified the following possibilitiesregarding the stockand bondmarkets. Probability Stock Returns Bond returns
0.25 2% 3%
0.40 8% 5%
0.35 11% 8%

Required:
a. Calculate the expected return, variance and standard deviation for stocks and bonds, and the covariance and correlation.
b. Which investment would a risk-averse individual undertake? Explain. How would your answer change if the bank account offered 7%? Explain. How would your answer change if the bank account offered 9%? Explain.

Emery pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. emery uses 825 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $48 per order. the cost schedules of two suppliers are as follows: vendor 1 vendor 2 quantity price/lb quantity price/lb 1-499 $17 1-399 $17.10 500-999 $16.75 400-799 $16.85 1000+ $16.50 800-1199 $16.60 1200+ $16.25 (a) what is the economic order quantity for each supplier? (b) what quantity should be ordered and which supplier should be used? (c) the total cost for the most economic order sire is $