The Daily Returns

1. Download the historical daily prices data for the S&P 500 index (?GSPC) from Yahoo Finance (https://finance.yahoo.com), and calculate the daily returns from 1928 to 2019.(a) What is the mean?(b) What is the standard deviation?(c) If we assume daily returns are normal distributed, what is the probability of a market crash of Oct 19, 1987?2. You have 1 million dollars of wealth. You build $800, 000 house at the beginning of the year on the east coast of Florida. During the year there is a 2% chance that the house will be destroyed by a hurricane-related flood. However, you are able to purchase flood insurance for a premium of $2 per $100 dollars of insured house value for the year. In the event that your home is destroyed by a flood, the insurance company makes a payment equal to the insured house value. You are a risk averse agent with utility of end-of-year wealth given by U(W ) = ?W?1. Assume that the interest rate for the year is 0% and that the value of the house, if unflooded, remains unchanged at the end of the year.(a) Let x be the amount of insurance that you purchase. In terms of x, what is wealth at the end of the period if the house is not destroyed by the flood?(b) Let x be the amount of insurance that you purchase. In terms of x, what is wealth at the end of the period if the house is destroyed by the flood?(c) What is expected utility in terms of the quantities given in parts (a) and (b)?(d) How much insurance should you purchase? You wish to maximize expected utility.(e) What percentage of the house value did you choose to insure?(f) Given the relationship between the premium and the insured value, is the ex- pected profit for the insurance company positive? Is the insurance contract actuarially fair?(g) Would the insurance company be more profitable if the premium was $3 per $100 of insured house value? Why or why not?

Struggling to find relevant content? Order a custom essay on
The Daily Returns
Let our experts save you the hassle
Order Now
Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
Sign up, place your order, and leave the rest to our professional paper writers in less than 2 minutes.
step 1
Upload assignment instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
s
Get personalized services with GPA Fix
One writer for all your papers
You can select one writer for all your papers. This option enhances the consistency in the quality of your assignments. Select your preferred writer from the list of writers who have handledf your previous assignments
Same paper from different writers
Are you ordering the same assignment for a friend? You can get the same paper from different writers. The goal is to produce 100% unique and original papers
Copy of sources used
Our homework writers will provide you with copies of sources used on your request. Just add the option when plaing your order
What our partners say about us
We appreciate every review and are always looking for ways to grow. See what other students think about our do my paper service.
Exploring Gender in Science, Technology, and Mathematics
Very good work
Customer 452769, July 2nd, 2022
Social Work and Human Services
Excellent Work!
Customer 452587, August 24th, 2021
Nursing
Perfect as usual!!! Thanks team!
Customer 452453, May 26th, 2021
Nursing
I appreciate all the hard work. Thank you!
Customer 452525, August 13th, 2021
Nursing
Writer did an excellent job! Thank you.
Customer 452693, January 14th, 2022
Other
GREAT
Customer 452813, June 25th, 2022
Nursing
Thank you MyCoursebay team for your support. With your help I got an A for my past courses
Customer 452635, May 7th, 2022
Other
OK
Customer 452813, July 3rd, 2022
Wellness
The skilled writer did a GREAT job!! Amazing .Thank you!
Customer 452547, June 16th, 2021
Other
NICE
Customer 452813, June 30th, 2022
Marketing
Yes and thank you
Customer 452701, October 25th, 2022
Finance
Thank You
Customer 452643, October 24th, 2021
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
error: Content is protected !!

Save More. Score Better. Use coupon code SPECIAL for a 15%discount