Scenario 15-5 An Airline Knows That There Are Two Types of Travelers

question 101

Multiple Choice

Scenario 15-5
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
-Refer to Scenario 15-5. How much profit will the airline earn if it sets the price of each ticket at $600?

• A)-$5,000
• B)$15,000
• C)$40,000
• D)$60,000

Understand the effects of portfolio diversification on risk.

Identify the impact of inflation and changes in risk aversion on the SML.

Calculate the expected return of portfolios and understand the role of beta in portfolio management.

Understand the concepts of the expected rate of return and how to calculate it for individual stocks and portfolios.

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Definitions:

Central Nervous System Depressants

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Excessive sweating, often as a symptom of an underlying health condition, physical exertion, or stress.

Tachycardia

A condition where the heart rate exceeds the normal resting rate, typically defined as a heart rate over 100 beats per minute in adults.

Substance Addiction

A chronic condition characterized by the compulsive use of substances despite harmful consequences, leading to mental and physical dependence.