another question with investment

[Lovextreme]

Spur currently have 2b alz that can invest on either seireitei bonds or seireitei stocks (gain ownership of the guild), Spur is a risk averse person with utility function U= ln W....... Spur has researched that if he invest all his money on seireitei stocks which the currently price is 250m each share, he will have 25% chance that the stock price will goes up to 750m per share. However if not, the price of the stock will drop to 100m per share. Spur also discovered that if he invest all his money into Seireitei bonds, he will have a return of 20% no matter what happens.

Question: Crate a best portfolio diversfication for Spur to invest on bonds and stocks in order to maxmize his utility

[Lann]

why do u guys have stocks...

[Cathy]

#ows

[ThisIsWhatYouLookLike]

this game is srs bzness

[SantaClaus]

Spur currently have 2b alz that can invest on either seireitei bonds or seireitei stocks (gain ownership of the guild), Spur is a risk averse person with utility function U= ln W....... Spur has researched that if he invest all his money on seireitei stocks which the currently price is 250m each share, he will have 25% chance that the stock price will goes up to 750m per share. However if not, the price of the stock will drop to 100m per share. Spur also discovered that if he invest all his money into Seireitei bonds, he will have a return of 20% no matter what happens.

Question: Crate a best portfolio diversfication for Spur to invest on bonds and stocks in order to maxmize his utility
Why the Hell are you Making us Do Math on Cabal
Why are You making us do your math when you replace some words on your math problem to people on cabal?

[Shinji]

Go solve the economic issue we have meng

[SantaClaus]

Go solve the economic issue we have meng
Santa Never Solves Anything

[Halcy]

Go solve the economic issue we have meng
go solve your own economic issue

[Ludacris]

Why not invest in something that is promising in real life and not in game?

[XFearMyBladeX]

Why not invest in something that is promising in real life and not in game?
cuz for some ppl cabal is real life O.O

[SantaClaus]

Why not invest in something that is promising in real life and not in game?
because we are little idiots thats are going to be homeless when were grown up

[XFearMyBladeX]

ohmaigawd santa is homeless o.0

[Shinji]

go solve your own economic issue
go buy a ps3 nub

[xFaLL3NxAng3L]

@_@ gawd this is funneh

[SantaClaus]

@_@ gawd this is funneh
why the hell would i want to do math on a game

[xFaLL3NxAng3L]

lmao ikr haha

[DragonWi]

is this your hw that you just reword???

[SantaClaus]

of course thats his hw he just changed the name to cabal related things

[SpankyMcMeat]

Invest 75% of your initial savings in bonds, and the remaining on stocks. If the stock price increases, you will have a gross earning of $1.3b, giving you a total of $3.3b. If the stock price decreases, your bond earnings of $300m will let you break even, thus giving you the opportunity to start the investment cycle at your initial savings once again.






Or you could just waste it all on crack and make it.......snow...... Ka.

[Ludacris]

i wana invest in your scamming fund. where i invest all my alz and money?

In My inventory, let me make a lvl1 so u can trade me k? still hang around in ch8? 8)

[xFaLL3NxAng3L]

brolic u nub -___- haha
im still waiting on my effing taco

[Ludacris]

lolol.. i go to king taco every once in a while, u should go, they make some good tacos there :)

[SantaClaus]

Invest 75% of your initial savings in bonds, and the remaining on stocks. If the stock price increases, you will have a gross earning of $1.3b, giving you a total of $3.3b. If the stock price decreases, your bond earnings of $300m will let you break even, thus giving you the opportunity to start the investment cycle at your initial savings once again.






Or you could just waste it all on crack and make it.......snow...... Ka.
how long did it take you to solve that? 10mins? 20mins? 1hr? 5hr?

[ZetsubouSensei]

na u mexican LOL quit long time

[SpankyMcMeat]

how long did it take you to solve that? 10mins? 20mins? 1hr? 5hr?

Bout 4 min.

[elvie]

Spur currently have 2b alz that can invest on either seireitei bonds or seireitei stocks (gain ownership of the guild), Spur is a risk averse person with utility function U= ln W....... Spur has researched that if he invest all his money on seireitei stocks which the currently price is 250m each share, he will have 25% chance that the stock price will goes up to 750m per share. However if not, the price of the stock will drop to 100m per share. Spur also discovered that if he invest all his money into Seireitei bonds, he will have a return of 20% no matter what happens.

Question: Crate a best portfolio diversfication for Spur to invest on bonds and stocks in order to maxmize his utility

Suppose that one kilogram of weed distributed to a plot of controlled territory to a fixed number of addicts will produce $1000. You might expect that an additional kilogram of weed would produce an additional $1000. However, if there are diminishing marginal returns, that additional kilogram will produce less than $1000. For example, the second kilogram of weed may only produce $500. Diminishing marginal returns also implies that a third kilogram of weed will produce an additional income that is even less than a half a thousand, say, $250.

[Lovextreme]

Answer:

Since Spur is a risk averse person with utility U=ln W

We know that the return of stock is 750m with 0.75 chance and 100m with 0.25 chance and bond will always give spur the return of 400m

So if we let stock be x then bond will be 1-x.

his expect utility function will be U=0.25 ln (7.5x+4(1-x)) + 0.75 ln (x+4(1-x))
simplify we will have U= 0.25 ln (3.5x+4)+0.75 ln (4-3x)

if we wanna maxmize his utility, we need to take the derivative of that function and set the equation equal to 0

we will have in the end

2.25/(4-3x)=0.75/(3.5x+4)

after a few calculation we get x<0 since we know x cannot be less than 0
so Spur will put all his money on bonds in order to maxmize his utility

[xFaLL3NxAng3L]

Omfg woooooooooooooooooooooah thats creepy math -____-

[TheTrueOne]

Answer:

Since Spur is a risk averse person with utility U=ln W

We know that the return of stock is 750m with 0.75 chance and 100m with 0.25 chance and bond will always give spur the return of 400m

So if we let stock be x then bond will be 1-x.

his expect utility function will be U=0.25 ln (7.5x+4(1-x)) + 0.75 ln (x+4(1-x))
simplify we will have U= 0.25 ln (3.5x+4)+0.75 ln (4-3x)

if we wanna maxmize his utility, we need to take the derivative of that function and set the equation equal to 0

we will have in the end
@
2.25/(4-3x)=0.75/(3.5x+4)

after a few calculation we get x<0 since we know x cannot be less than 0
so Spur will put all his money on bonds in order to maxmize his utility


Don't u be coming over here talking your sign language and Dervy talk, you take that back to city son, just cause y'all got cellular pads and w/e the such don't mean u know nothing bout hunting coons, next time u in the bush get at me.

[SantaClaus]

Answer:

Since Spur is a risk averse person with utility U=ln W

We know that the return of stock is 750m with 0.75 chance and 100m with 0.25 chance and bond will always give spur the return of 400m

So if we let stock be x then bond will be 1-x.

his expect utility function will be U=0.25 ln (7.5x+4(1-x)) + 0.75 ln (x+4(1-x))
simplify we will have U= 0.25 ln (3.5x+4)+0.75 ln (4-3x)

if we wanna maxmize his utility, we need to take the derivative of that function and set the equation equal to 0

we will have in the end

2.25/(4-3x)=0.75/(3.5x+4)

after a few calculation we get x<0 since we know x cannot be less than 0
so Spur will put all his money on bonds in order to maxmize his utility
hmmmm make is more simplier

[SpankyMcMeat]

Answer:

Since Spur is a risk averse person with utility U=ln W

We know that the return of stock is 750m with 0.75 chance and 100m with 0.25 chance and bond will always give spur the return of 400m

So if we let stock be x then bond will be 1-x.

his expect utility function will be U=0.25 ln (7.5x+4(1-x)) + 0.75 ln (x+4(1-x))
simplify we will have U= 0.25 ln (3.5x+4)+0.75 ln (4-3x)

if we wanna maxmize his utility, we need to take the derivative of that function and set the equation equal to 0

we will have in the end

2.25/(4-3x)=0.75/(3.5x+4)

after a few calculation we get x<0 since we know x cannot be less than 0
so Spur will put all his money on bonds in order to maxmize his utility

What the hell this doesn't make any sense. My equation is the best way to maximize his utility. Why would he invest all his money on bonds if you said he was a "risk taker"? Why even ask this question if all you're going to end up doing is being a safe-sally and not risk anything?! Useless thread is useless...

[Lovextreme]

plug ur numbers and mine into the Expect utility function and you will see who has larger utility =)

[Enter_Skyline]

no seriously, what f**k are you talking about.

[SpankyMcMeat]

plug ur numbers and mine into the Expect utility function and you will see who has larger utility =)

Screw the function. My way has a 0% chance of LOSING money while taking that risk. With my way, you can only EARN money. If it doesn't work the first time, you start at square one, and continue from there. Unlimited amount of tries mang. I win.

[Lovextreme]

Screw the function. My way has a 0% chance of LOSING money while taking that risk. With my way, you can only EARN money. If it doesn't work the first time, you start at square one, and continue from there. Unlimited amount of tries mang. I win.
it will also make sense in real life if we dun consider about the fuction that has been given. Since Spur is a risk averse person and the chance of getting 750m is super low, even though ur way will prevent 0 risk and wont lose anything, but it also won't let Spur to gain anything from that investment. it is happier for Spur to just invest on the bonds so he can earn the money and feel happy instead of taking the risk. Dun u ever heard of "time value of money'?

[ROFLwiz]

go buy a ps3 nub

go get hacked moar feg

[SpankyMcMeat]

even though ur way will prevent 0 risk and wont lose anything, but it also won't let Spur to gain anything from that investment.


Invest 75% of your initial savings in bonds, and the remaining on stocks. If the stock price increases, you will have a gross earning of $1.3b, giving you a total of $3.3b. If the stock price decreases, your bond earnings of $300m will let you break even, thus giving you the opportunity to start the investment cycle at your initial savings once again.

Point proven long ago.


it is happier for Spur to just invest on the bonds so he can earn the money and feel happy instead of taking the risk. Dun u ever heard of "time value of money'?

Have you ever heard of "Market Risk"? Risk/chance is key to stock exchanging.

[xFaLL3NxAng3L]

+1
haha

[Lovextreme]

Point proven long ago.



Have you ever heard of "Market Risk"? Risk/chance is key to stock exchanging.

that also depending on what kind of risk person u r, as i alrdy metioned Spur is risk averse. Market risk is only capable for risk lover, risk averse dun like it, thats y u dun see all of us investing on risk stocks wat so ever

[Shinji]

go get hacked moar feg
2 more free games feg

[Lovextreme]

no risk = no profit
i agree

[SpankyMcMeat]

that also depending on what kind of risk person u r, as i alrdy metioned Spur is risk averse. Market risk is only capable for risk lover, risk averse dun like it, thats y u dun see all of us investing on risk stocks wat so ever


Why even ask this question if all you're going to end up doing is being a safe-sally and not risk anything?! Useless thread is useless...

I rest my case.