Question 1

Using the table below show and explain whether the two assets A and B are ideal for Hedging

State of the world	Probability	Return A	Return B
Expansion	25%	32%	5%
Normal	50%	14%	15%
Recession	25%	4%	25%

Question 2

1. Complete the Contingency Budget for the table below
2. If risk C and F actually occurred, you would be able to tap the contingency budget for relief?
3. Should you focus on risk F and why?

PDE 2017 Academic Calendar-Fa [PDE] contingency budget.pdf [PDE Total_Cost_of Risk.pdf PDE contingency budget.pdf X + X file:///C:/Users/mc4623/Documents/Mark's%20Backup%2010-2-2017/Documents/risk%20Analysis%20and%20management/contingency%20budc 12: . . Risk P (Risk Probability) I (Cost Impact) Risk Contingency P * Ic A .7 E20,000 B . 4 E15,000 C .6 E10,000 D .3 E30,000 E 5 $25,000 F 8 E35,000 Total E135,000 Risk P (Risk I (Cost Risk Probability) Impact) Contingency O Type here to search e wl G 4:11 PM 9/24/2017