LEWIS CORP e Prompt.

ORP

Sascha owns stock in Lewis Corp and she bought a $5,000 corporate bond. She received $52.50

in quarterly interest from the bond. Sascha also owns stock in Lewis Corp which is worth $46

per share, and it pays a $2 annual dividend.

Part A

Which is higher, the yield on the stock or the annual interest rate on the bond? Show your

work and explain how you determined your solution.

at the task is askin...

Part B

If the bond matures in seven years, how much will Lewis Corp have paid Sascha in total?

w

C

Aprisoner is trapped in a cell containing three doors. the first door leads to a tunnel that returns him to his cell after two days of travel. the second leads to a tunnel that returns him to his cell after three days of travel. the third door leads immediately to freedom. (a) assuming that the prisoner will always select doors 1, 2 and 3 with probabili- ties 0.5,0.3,0.2 (respectively), what is the expected number of days until he reaches freedom? (b) assuming that the prisoner is always equally likely to choose among those doors that he has not used, what is the expected number of days until he reaches freedom? (in this version, if the prisoner initially tries door 1, for example, then when he returns to the cell, he will now select only from doors 2 and 3.) (c) for parts (a) and (b), find the variance of the number of days until the prisoner reaches freedom. hint for part (b): define ni to be the number of additional days the prisoner spends after initially choosing door i and returning to his cell.