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Author Question: Suppose a risk-neutral power plant needs 10,000 tons of coal for its operations next month. It is ... (Read 75 times)

B

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  • Posts: 570
on: Jul 1, 2018
Suppose a risk-neutral power plant needs 10,000 tons of coal for its operations next month. It is uncertain about the future price of coal. Today it sells for 60 a ton but next month it could be 50 or 70 (with equal probability). How much would the power plant be willing to pay today for an option to buy a ton of coal next month at today's price? (Ignore discounting over the short period of a month.)
 a. 5
  b. 4
  c. 3
  d. 0

Question 2

The most significant expansion of Medicaid since its inception occurred in 1997 and is referred to as
 a. SCHIP.
  b. SHIP.
  c. TANF.
  d. AFDC.


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iceage

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Reply #1 on: Jul 1, 2018
Answer to Question 1

a

Answer to Question 2

A


B

  • Member
  • Posts: 570
Reply 2 on: Jul 1, 2018
Excellent

tuate

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  • Posts: 332
Reply 3 on: Yesterday
Great answer, keep it coming :)

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