Sensitivity Analysis Assignment | Homework For You
May 26th, 2020
Let us suppose you can put your money into a savings account and earn $502 in two years. Alternatively, you could put your money into a risky investment or into a more conservative investment. For the risky investment if the economy is good, will profit you $2000, but during a bad year, you would lose $500. For the conservative investment if the economy is good, will profit you $948, but if the economy is bad, you will lose $254.
Conduct a sensitivity analysis between the savings account option and the risky Investment for the probability p. At what value p would someone who is risk neutral be indifferent between the savings account and the risky Investment.

Note: if your answer is 91.2345%, enter in 0.9123. Get Finance homework help today
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