Consider a risky portfolio. the end-of-year cash flow derived from the portfolio will be either $70,000 or $200,000 with equal probabilities of .5. the alternative risk-free investment in t-bills pays 6% per year.
a. if you require a risk premium of 8%, how much will you be willing to pay for the portfolio? (round your answer to the nearest whole dollar amount. omit the "$" sign in your response.)
$
b. suppose that the portfolio can be purchased for the amount you found in (a). what will be the expected rate of return on the portfolio? (round your answer to the nearest whole number. omit the "%" sign in your response.)
rate of %
c. now suppose that you require a risk premium of 12%. what is the price that you will be willing to pay? (round your answer to the nearest whole dollar amount. omit the "$" sign in your response.)
$

In year 1, the bennetts' 25-year-old daughter, jane, is a full-time student at an out-of-state university but she plans to return home after the school year ends. in previous years, jane has never worked and her parents have always been able to claim her as a dependent. in year 1, a kind neighbor offers to pay for all of jane's educational and living expenses. which of the following statements is most accurate regarding whether jane's parents would be allowed to claim an exemption for jane in year 1 assuming the neighbor pays for all of jane's support? a.no, jane must include her neighbor's gift as income and thus fails the gross income test for a qualifying relative.b.yes, because she is a full-time student and does not provide more than half of her own support, jane is considered her parent's qualifying child.c.no, jane is too old to be considered a qualifying child and fails the support test of a qualifying relative.d.yes, because she is a student, her absence is considered as "temporary." consequently she meets the residence test and is a considered a qualifying child of the bennetts.