Two Firms,A and B,each Currently Dump 50 Tons of Chemicals

question 182

Multiple Choice

Two firms,A and B,each currently dump 50 tons of chemicals into the local river.The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river.It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river,and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river.The government gives each firm 20 pollution permits.Government officials are not sure whether to allow the firms to buy or sell the pollution permits to each other.What is the total cost of reducing pollution if firms are not allowed to buy and sell pollution permits from each other? What is the total cost of reducing pollution if the firms are allowed to buy and sell permits from each other? You should assume that any firm that buys a permit pays the highest price for that permit.

• A)$3,000; $1,500
• B)$4,500; $3,500
• C)$4,500; $4,000
• D)$4,500; $2,500

Understand the effects of correlation on portfolio risk (standard deviation).

Apply knowledge on choosing stocks based on maximizing returns or minimizing risks.

Grasp the fundamental concepts of binomial distribution and its application to real-world scenarios.

Understand the calculation of portfolio variance and its dependence on stock correlation.

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Definitions:

Declared

In programming, to specify the type and optionally the initial value of variables or functions before they are used.

Global Variables

Variables defined in a program's global scope, accessible and modifiable from any part of the program.

Physically Placed

Refers to the actual location or arrangement of components within a hardware system or in a specific memory area.

Automatically Accessed

Refers to data or resources that are retrieved or used by a program without explicit instructions from the programmer.