Working towards the profit of your investment

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Consider the following situation.
i. The risk-free ratelof return for all maturities up to one year is r = 4% per year, compounded continuously. ii. You currently have $100,000 in cash.
Assume that all stocks follow the Gaussian-step random-walk model introduced in lecture. There are two stocks that you are considering as an investment.
(A) Stock A has parameters 11A = 0.20 and cA = 0.16. (B) Stock B has parameters ilB = 0.18 and cB = 0.10.
Now solve the following, showing all applicable work. (a) (2 points) In which stock do you invest your $100,000 if you want to maximize the value of your investment after a year has passed, and why?
(b) (2 points) What is the present value of the expected profit of your investment in part (a)? That is how much more do you expect to earn than what you would have achieved by investing $100,00 at the risk-free rate.

 

 

Sample Solution

Whereas someone with bipolar disorder may exhibit bouts of mania/depressive episodes for weeks or months, the mood swings of someone with BPD can change during afternoon tea. For Jodie, she may feel that if her partner leaves, she will be alone and not have an opportunity for another relationship. She acts out in an effort to change what is going on. This fight or flight response has manifested itself in violence toward her partner which suggests an underdeveloped cognitive trait. While her intense anger may worsen when she’s under stress, structural and functional changes in her brain are more likely be to blame.

SEXUAL IDENTITY TRAITS

In their review Sexual Behavior in Borderline Personality by Randy A. Sansone, M.D. and Lori A. Sansone, M.D., people who have BPD “are more likely to exhibit greater sexual preoccupation, have earlier sexual exposure, engage in casual sexual relationships, report a greater number of different sexual partners as well as promiscuity.” Jodie stated she has had multiple relationships in the last year. All of which have been ‘very intense’. This is a classic symptom of BPD and indicates she is at higher risk for victimization as well as an increased likelihood of contracting a sexually transmitted disease.

In a study conducted of 71 female patients with BPD, “46% of the women reported having ‘entered into sexual relationships with partners they did not know well, and 28% reported five or more such relationships” (Hull, Clarkin, & Yeomans, 1993). Overall, the psychological themes relating to sexual behavior in borderline personality disorder appear to be characterized by impulsivity and victimization (Sansone, 2011).

PERSONALITY TRAITS

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