Consider an asset with the following structure. The asset has a life of 15 periods. In each period, the asset pays a dividend which might be $1, $2, or $3 in each period, each dividend value being equally likely. The asset has no value after the last dividend has been paid. What is the fundamental value of the asset in period 1

 options:

	$4
	$15
	$30
	$60

Please refer to previous qs. What is the fundamental value in period 10?

	$12
	$16
	$24
	$60

Giving traders in an experimental asset market less money to trade assets has the effect of

	lowering prices
	increasing prices
	moving prices closer to fundamental values
	making prices less volatile

A trader who has Adaptive Expectations predicts prices for the current period based on

	their prediction last period and the price last period
	their price predictions in the last two periods
	market prices in the last two periods
	their prediction last period and the price two periods previously

Suppose that the prices in an experimental asset market were 20 in period 1 and 29 in period 2. Period 3 is about to begin. Uraraka has Adaptive expectations with a Beta parameter equal to 0.6. Her previous predictions were 30 in period 1 and 24 in period 2. What does she think the price will be in period 3?

	28
	27
	21
	33

An individual with Trend-Following expectations bases their predictions on:

	their predictions in the preceding two periods
	the prices of the asset in the previous two periods
	both predictions and asset prices in the previous two periods
	their prediction and the price of the asset

Tsu has Trend Following expectations. It is now the beginning of period 3. The prices in period 2 were 20 and 30. Her predictions in the two periods were 25 and 20. She has a Beta parameter of .5. She predicts that the price in period 3 would be

	35
	40
	15
	38

people who have relatively high CRT scores tend to

	be net sellers when the price is higher than the fundamental value
	be net purchasers when the price is higher than the fundamental value
	be net sellers when the price is lower than the fundamental value
	trade randomly

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The fundamental value of the asset in period 1 is 30 This is because the asset will pay o... View the full answer