the common stock of moore inc. is expected to lose 6% in a recession, earn 8% in a normal economy, and earn 15% in a booming economy. the probability of a boom is 5 percent while the probability of a recession is 45 percent. what is the expected return on this stock?

Answers

Answer 1

Expected[Returns]=0.0745

What is Recession?

A recession is a recession in which there is a general decline in economic activity. A recession generally occurs when spending is widespread.

What is Booming Economy?

Booming economy are often brief periods of rapid real GDP growth leading to lower unemployment, faster inflation, and higher asset prices.

Solution:

Given in the question,

(Note: To convert percentage to decimal divide it by 100.)

Recession=will loose 6%, converting to decimal=0.06

Normal Economy=will earn 8%, converting to decimal=0.08

Booming Economy=will earn 15%, converting to decimal=0.15

Probability of Recession=45%, converting to decimal=0.45

Probability of Normal economy=50%, converting to decimal=0.5

Probability of Booming Economy=5%,  converting to decimal=0.05

Now to calculate the expected return we will use the following Formula

Multiplying elements in with their respected phase of market we get,

Expected[Returns]=(0.06x0.45)+(0.08x0.5)+(0.15x0.05)

Expected[Returns]=0.0745

Hence, the return E[R] is 0.0745

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Related Questions

eric is concerned about not having enough air conditioning units in inventory during june, july, and august so he keeps extra inventory to guard against stockouts during this critical period. eric is keeping

Answers

Eric is keeping Safety Stock.

What is Safety Stock?Logisticians refer to a degree of excess stock as "safety stock" to reduce the danger of stock outs (a shortage of raw materials or packaging) brought on by erratic supply and demand. A sufficient safety stock level enables business activities to operate as planned. When demand, supply, or production yield are unknown, safety stock is kept as a precaution against stock outs.A safety stock is an extra quantity of a product kept in the inventory to lower the possibility that it will run out. It serves as a buffer stock in the event that sales are higher than anticipated or the supplier is unable to supply the extra units on time.

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Cheng is making a trip to her safe deposit box. what is she most likely planning to do? a. pay a monthly credit card bill at a bank. b. put her marriage license in a secure location. c. register for an updated driver’s license. d. ask for help with her recent tax return.

Answers

Since Cheng is going to her safe deposit box, the most likely thing she's planning to do is to put her marriage license in a secure location. Therefore, the correct answer is option B.

Safe deposit box is a box, locked and stored in a vault. The vault is generally located in post offices, banks, or other institutions. Safe deposit boxes are used to store valuable possession. Customers can store various things in it, such as luxury goods, important documents, or computer data. The size of the safe deposit box usually ranges from 3 by 5 inches to 10 by 10 inches.

Attached below is a picture of the safe deposit boxes inside a Swiss Bank.

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martinez corporation reported net sales of $765,000 and net income of $142,000. the profit margin is:

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Martinez corporation reported net sales of $ 765,000 and net income of $142,000. the profit margin is 18.56%.

How to calculate profit margin?

The formula for calculating the profit margin is expressed as:

Profit margin = net income/net sales

The profit margin is the net income divided by net sales.

Given the following parameters;

Net income = $142,000

Net sales = $765,000

Total Assets = $7,634,409

Profit margin = $765,000/$765, 000

Profit margin =  18.56%

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What are the benefits of price comparison?.

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Comparing product prices on various websites can help you spot differences and reflect the actual selling price of a product.

You can get new models cheaply as well as reasonable prices for the age. The main reason people use price comparison websites is that they can search hundreds of sites offering deals from different providers to find the best deals. There may be smaller or lesser-known companies that offer the service you want at a much lower price. It is to point out the similarities outside.

Comparison shopping helps in buying the product of choice at the desirable cost. As internet shopping is developing very fast the comparison shopping has become easier. More than 80% of buyers compare the prices of the items they want to buy. It is seen that the higher the price of the item the percentage of cost comparison of that item online increases.  

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What determines the demand for automobiles?.

Answers

Economic issues, which are among the most significant elements determining automotive demand, are one of the many factors that influence the demand for automobiles globally.

The recession brought on by the pandemic was one of the main factors lowering demand for automobiles in 2020.Interest rates, unemployment rates, the Gross Domestic Product (GDP), disposable income, and exchange rates are examples of economic factors.

Interest rates: Low interest rates guarantee simple auto financing, resulting in more sales. However, increased borrowing rates make even more affordable and compact cars unaffordable.Exhanging rates: The auto sector is incredibly cutthroat. A lower exchange rate enables both you and your rivals to effectively sell your products abroad. Additionally, it gives clients more affordable options and raises their spending power, which improves sales.

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on december 31 spearmint, incorporated, issued $450,000 of 9 percent, 3-year bonds for cash of $461,795. after recording the related entry, bonds payable had a balance of $450,000 and premium on bonds payable had a balance of $11,795. spearmint uses the straight-line bond amortization method. the first semiannual interest payment was made on june 30 of the next year. complete the necessary journal entry for june 30 by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answers

The journal entries as on the date June 30 will have an effect debit to Interest Expenses and Premium Accounts, and credit to the Cash Accounts. Additionally, Proceeds Account will be debited, and the Bond Ac, Premium on Bonds will be credited.

The journal entries for the given accounting transaction in the books of Spearmint Inc. will be as below,

Interest expense Ac. Dr.                     18,284.17

Premium Ac. Dr.                                   1,965.83

   To, Cash                                                              20,250

Proceeds Ac. Dr.                                    461,795

   To, Bonds Payable Ac. .                                   450,000

   To, premium on bonds payable Ac.                     11,795

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the purchase price and all costs to bring an asset to its desired condition and location for use should be (fill the blank)

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The purchase price and all costs to bring an asset to its desired condition and location for use should be capitalized.

A purchase is transformed into an asset on the balance sheet when it is capitalized. The bigger the amount of costs that are capitalized as opposed to expensed, the higher the profit that may be disclosed to shareholders. Can you perhaps capitalize each word, then? A firm must possess or control an asset with future demonstrable economic value in order to capitalize a transaction. Your purchase cannot be capitalized if it doesn't fall inside those restrictions.

Inappropriate cost capitalization can mislead investors into thinking a company's profit margins are higher than they actually are.

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Complete Question:

The purchase price and all costs to bring an asset to its desired condition and location for use should be ______.

Multiple choice question.

capitalized

expensed

accrued

bp reports that the total amount recognized as a provision during the year was $30,261 million, which includes $12,567 million for items covered by the trust fund and $17,694 million for other items. show the necessary journal entry to account for this transaction. (hint: journal entry with two debits and one credit)

Answers

The journal entry for the given transaction is

To BP A/c                 Dr.      $12,567

To BP A/c                 Dr.      $17,694

    Total amount           Cr.               $30, 261.

[trust fund and the other items transaction]

Journal entry:

In accounting, the journal entry contains the data significant to a single business transaction, including the date, the amount to be credited and debited, a brief description of the transaction and the accounts affected.

Given,

BP reports that the total amount recognized as a provision during the year was $30,261 million, which includes $12,567 million for items covered by the trust fund and $17,694 million for other items.

Here we need to show the necessary journal entry to account for this transaction.

While we looking into given transaction, we have identified that there are 2 credits and one debit.

The 2 credits are trust fund and the other items transaction. And the debit is the opening balance of the account.

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which of the following reflects a hedge of net receivables in british pounds by a u.s. firm? a. purchase a currency put option in british pounds. b. sell pounds forward. c. borrow u.s. dollars, convert them to pounds, and invest them in a british pound deposit.

Answers

A U.S. company's decision to (A) buy a currency put option in British pounds and (B) sell pounds ahead reflects hedging its net payables in pounds.

A hedge is a position in the market used to counteract any gains or losses that might be experienced by a companion investment. Hedging is a sophisticated risk management tactic that involves buying or selling securities to potentially help lower the likelihood of a position's loss.

A U.S. company may borrow U.S. dollars, exchange them for pounds, and then place the converted funds in a British pound deposit to hedge its net payables on British pounds.

The money market hedge and the forward hedge will produce the same outcome.

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is an international organization of nation-states that seeks to promote peace, international relations, and economic and environmental programs

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The United Nations is an international body established in 1945 by 51 nations dedicated to upholding international peace and security and fostering friendly ties between nations.

What was the international  peace organization called?

The first intergovernmental body created "to foster international cooperation and to achieve world peace and security" was the League of Nations (1920–1946).

What is the purpose of international peace organizations?

Its goals are to: Advance an equitable global peace that honours social and cultural diversity. denounce the perpetrators of all sorts of hostility and armed conflict against people.

Diplomacy in advance and negotiation:

Preventing wars before they start is the most efficient strategy to reduce human suffering and the enormous economic costs of conflicts and their aftermath. Through diplomacy, goodwill, and mediation, the UN plays a significant part in conflict prevention. Special envoys and political missions on the ground are some of the tools the Organization employs to promote peace.

Representatives, envoys, and advisers of the Secretary-General who are special and personally

In various parts of the world, the UN Secretary-General has Special and Personal Representatives, Envoys, and Advisers.

Peacekeeping

One of the UN's most useful tools for helping nations travel the treacherous path from war to peace has proven to be peacekeeping. In addition to preserving peace and security, today's multifaceted peacekeeping operations are required to support political processes, safeguard civilians, aid in the demobilisation and reintegration of former combatants, support constitutional processes and election organisation, protect and promote human rights, and help restore the rule of law and legitimate state authority.

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what is the future value of a 10 year annuity, if 100$ are made at the end dof the year and the interest rate is 8%

Answers

The future value of 10 year annuity = $1448.66

Future value :

Future Value (FV) is the current value of an asset at a future date based on its assumed growth rate. Future value is important to investors and financial planners. Because we can estimate how much an investment made today will be worth in the future. Future value is the value of an asset at a point in time. It measures the nominal future amount of money that is 'worth' a particular amount at a particular point in the future given a particular interest rate, or more generally a rate of return. It is the present value multiplied by the cumulative function.

Equating future value :

Since the 1 place at eash How is taking year is Ordinary Annuity the end of the SO it 8N = years8888/

PMT= $100

future value of EVE 100 ((1+608))-) 0-08 To 100

For (80•D/ 80.0 001 2.1589-1 0.08 100 X 1-1589

= $1448.66

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The real bills doctrine was the guiding principle for the conduct of monetary policy during the: A) 1910s; B) 1940s; C) `950s; D) 1960s

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The real bills doctrine was the guiding principle for the conduct of monetary policy during the 1910s. Correct answer: letter D.

This doctrine managed to stabilize the economy during the 1910s, and was responsible for the economic expansion that took place during this decade.

The doctrine of real banknotes during the 1910s

It is a monetary theory that holds that banks should only issue loans if they are backed by real, tangible assets. The theory was first proposed by Scottish economist William Hamilton in the early 19th century, and it gained traction in the United States during the 1910s. The real bills doctrine was seen as a way to stabilize the banking system and prevent financial panics.

This doctrine stated that the money supply should be increased or decreased depending on the needs of the economy. This doctrine was based on the idea that the economy would expand if the money supply was increased, and contract if the money supply was decreased.

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1. The real interest rate in the US is ___ (options are: -1%, -0.1%,0.2%,1%,2%); and the real interest rate in the United Kingdom is ___ (options are: -2%, 2%, 0.2%, -0.1%,-1%)
2. In response to these real interest rates, international investment flows from the ___ (options are: US or United Kingdom) to the ___ (United kingdom or US).
3. As a result of these investment flows, the dollar would ___ (options are: Remain the same, depreciate, appreciate) against the pound.

Answers

The real interest rate in the US is -1% and the real interest rate in the United Kingdom is 2%.  In response to these real interest rates, international investment flows from the US to the United Kingdom. As a result of these investment flows, the dollar would appreciate against the pound.

The interest rate that an investor, saver or lender actually receives (or anticipates receiving) is known as the real interest rate. The Fisher equation, which asserts that the real interest rate is roughly the nominal interest rate less the inflation rate, can be used to explain it in greater detail.

An investor would anticipate earning a real interest rate of 3% if, for instance, they were able to secure a 5% interest rate for the following year and expected a 2% increase in prices. Since various investors have varying expectations for future inflation, the predicted real interest rate cannot be expressed as a single number. Volatility in inflation is a danger because the inflation rate over the duration of a loan is not immediately known.

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francine views her manager as a colleague and does not hesitate to approach her manager with new ideas or to question a decision. , francine is highly committed to the organization and seeks to make a positive impact on her colleagues and customers.

Answers

Francis views her manager as a colleague and does not hesitate to approach her manager with new ideas or to question a decision. An effective follower francine is highly committed to the organization and seeks to make a positive impact on her colleagues and customers.

What is Manager?

A manager refers to a person who is responsible head of any organization and helps in arranging the resources, checking the progress, and timely completion of it to meet the objective decided.

In the given case, it is explained that Francis sees her manager as a colleague and will approach her with fresh suggestions or to contest a choice. Francine is an effective follower since she is really dedicated to the company.

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The complete question is Probably

Francine views her manager as a colleague and does not hesitate to approach her manager with new ideas or to question a decision. An ____ , Francine is highly committed to the organization and seeks to make a positive impact on her colleagues and customers.

can you withdraw from your 529 for non-529 expenses up to your cost basis without paying taxes or penalty?

Answers

Contributions to 529 plans aren't eligible for a federal tax deduction so they constitute money that has already been taxed. As an end result, account owners (commonly dad and mom) can withdraw any part of their unique contributions without taxes or consequences.

The federal taxes you pay are utilized by the authorities to invest within the united states and to offer goods and offerings for the benefit of the yank people. The 3 largest classes of prices are important fitness packages, inclusive of Medicare and Medicaid. Social security.

Federal income taxes are accumulated with the aid of the federal authorities, even as national profits taxes are collected by the person or state(s) in which a taxpayer lives and earns income. (it can get complex if you stay in one country and work in another, which has passed off extra regularly throughout the pandemic.)

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list and describe three product characteristics that impact the rate of adoption. give an example of a newer product you feel exhibits these characteristics.

Answers

Marketing research shows that you can increase the rate of adoption of your new product modification by offering the following characteristics: high relative advantage, high compatibility, low complexity, high divisibility, and high communicability.

Marketing is the pastime, set of institutions, and techniques for developing, speaking, turning in, and changing offerings that have fee for customers, clients, partners, and society at big. (advertising blend explained) The four ps are product, fee, location, and promoting.

they're an example of a “advertising mix,” or the combined equipment and methodologies utilized by entrepreneurs to achieve their advertising targets. The four ps had been first officially conceptualized in 1960 by using E.

it is, in brief, a movement taken to convey interest to a commercial enterprise' offerings; they may be physical items for sale or offerings provided. commonplace examples of advertising at work include television commercials, billboards at the side of the street, and magazine classified ads.

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the economic factors that most affect the demand for consumer goods are employment, wages, prices/inflation, interest rates, and consumer confidence.

Answers

It is true that employment, wages, prices/inflation, interest rates, and consumer confidence are the economic factors that have the biggest impacts on the demand for consumer products.

Inflation: What is it?

The gradual decline in purchasing power can be equated with price increases or inflation. It is possible to estimate the rate of decline in purchasing power using the average price increase of a sample of goods and services over time. The price increase, which is sometimes expressed as a percentage, effectively results in a unit of currency buying less.

In contrast to inflation, deflation is characterized by a decline in prices and an increase in purchasing power. Although it is simple to track price changes over time for specific products, human needs go beyond just one or two products.

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case study: honest tea, hbr. please write-up the case and address the following questions: what is your assessment of the general environment of the tea beverage industry? how big is the addressable market for honest tea?

Answers

Tea is recognized as a nutritious beverage and has significant cultural values. As a result, the tea beverage market is one of the most profitable and quickly expanding.

A market is exactly what?

A market is a place where buyers and sellers can meet and trade goods and services. Markets can be physical like a store or they can be digital like an online retailer. More examples include the financial market, the black market, and the auction market.

What purpose does a market fulfill?

Markets are important. They act as the corporate stock exchange and give businesses access to capital. Prices are determined by markets, liquidity is changed by markets, and firms can satisfy client demands through markets.

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Do US citizens pay sales tax?.

Answers

There is no standard rate because there is no national sales tax in the US.

What is sales tax?

There are five states that do not require you to pay sales tax on products and services: Delaware, Alaska, Montana, New Hampshire, and Oregon. The absence of a state sales tax does not, however, preclude towns, parishes, municipalities, or other communities within that state from enacting one.

Foreign tourists are not eligible for a sales tax rebate from the US government. Similar to how Value Added Tax (VAT) is handled in many other countries, sales tax collected in the United States is paid to individual states rather than the federal government.

By dividing the purchase price by the relevant tax rate, sales tax is computed. At the time of the sale, the seller takes it.

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What are the four goals of the World Trade Organization?.

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The World Trade Organization (WTO) was founded in 1995 as the GATT's successor organization (General Agreement on Trade and Tariff). In order to support all multilateral trade agreements, the GATT was established in 1948 with the support of 23 countries.

Its goal was to provide equal opportunities for all countries to participate in international trade negotiations. The WTO must establish a trading system based on rules, in which nations are prohibited from imposing unjustifiable trade restrictions.

Setting and enforcing norms for international commerce, presenting a panel for negotiating and overseeing further trade liberalization, resolving trade disputes, and improving the clarity of decision-making processes are the four objectives of the WTO.

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a $78.00 pair of shoes cost $84.63 after tax is added. what is the tax rate? (no spaces just type your answer) show your work for credit.

Answers

The tax rate is 8.5% after the details are calculated.

What is the tax rate?

The amount at which a company or individual is taxed is known as the tax rate. Statute, ordinary, marginal, and actual tax rates are just a few of the ways that can be displayed. These percentages can be displayed using the comprehensive exclusive and categories of a tax base.

Let x% be the tax rate

The cost of shoes without tax  is $78

The cost of shoes including tax will be

[tex]78 + x/100 \times 78[/tex]

It is given that the Cost of shoes including tax is 84.63

84.63 = [tex]78 + x/100 \times 78[/tex]

84.63 - 78 = 78x/100

6.63 =  78x / 100

(6.63 * 100) / 78 = x

8.5% = x

Hence, 8.5% of the cost is tax.

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mission tortilla brand mexican foods has added a new, low-carbohydrate version of its flour tortillas. this is an example of a

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Mission tortilla brand Mexican foods has added a new, low-carbohydrate version of its flour tortillas. this is an example of a product line extension.

A tortilla is a skinny, circular unleavened flatbread originally made from maize hominy meal, and now additionally from wheat flour. The Aztecs and other Nahuatl audio system referred to as tortillas tlaxcalli.[1] First made through the indigenous peoples of Mesoamerica before colonization, tortillas are a cornerstone of Mesoamerican cuisine. Corn tortillas in Mesoamerica are recognized from as early as 500 BCE. Europeans introduced wheat and its cultivation to the American continent, and it remains the source for wheat flour tortillas. Wheat flour tortillas were originated in the northern region of Mexico.

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why do most measurement control situations include a r-chart along with the x-bar chart? group of answer choices it is important to measure and understand variability within a sample along with the sample averages. the r-chart is another way of measuring x-bar, so this turns out to be an extra check on the control of the sample averages. the r-chart is easier to calculate, so it is a way to be sure the worker doesn't make a mistake. the ups and downs of the x-bar chart should exactly match the ups and downs of the r-chart; if not, the process is out of control. none of the above is a correct answer.

Answers

Most measurement control situations include an r-chart along with the x-bar chart because it is necessary to measure and understand variability within a sample along with the sample averages.

To track process variables, an R-Chart is generally used in conjunction with an X-Bar Chart. Control limits may be excessively broad if the variable isn't under control, making it difficult to identify the reasons for variation that are affecting the process mean. Every dot in the graph serves as the subgroup mean value.

The X-bar and R-chart pair are frequently used by manufacturers to display continuous data. The X-bar aids in tracking the process' average or mean and how it altered over time. The sample range, or the difference between the highest and lowest value in each sample, is shown by the R-chart.

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What are the 5 main components of NIMS?.

Answers

NIMS Components: Command and management. Preparedness. Resource management. Communications and information management.

Preparedness, Communications and Information Management, Resource Management, Command and Management, and Ongoing Management and Maintenance are the five NIMS Components as described by NIMS 2008.

There are four NIMS Structures that give incident managers the tools they need to organize and manage incident response in a standardized way. These four components work together to form the NIMS Command and Coordinating structures.

All levels of government, nongovernmental groups, and the corporate sector are guided by the National Incident Management System (NIMS) to collaborate in order to avoid, protect against, mitigate, respond to, and recover from incidents.

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Fixed costs total $247,000, and variable costs are $37 per unit. ... dollars LO P2 SBD Phone Company sells its waterproof phone case for $124 per unit.

Answers

Determine the contribution margin per unit            

           per unit          

   sales       124          

 less: variable costs     37          

   contribution margin     87          

 Contribution margin ratio                

   Choose Numerator     / Choose Denominator    = Contribution margin ratio

   contribution margin per unit/selling price per unit   = Contribution margin ratio

   87      / 124     = 70%    

Determine the break-even point in dollars              

   Choose Numerator     / Choose Denominator    = break-even point in dollars

   total fixed cost     / Contribution margin ratio   = break-even point in dollars

   247000      / 70%     = 352857                        

 ( in absence of instructions I have used 70% rounded figure for calculation of break even point in dollars.

Algebraic computations with variables as though they had been express numbers resolve quite a number problems in a single computation. as an example, the quadratic formulation solves any quadratic equation by substituting the numeric values of the coefficients of that equation for the variables that represent them within the quadratic method. In mathematical good judgment, a variable is both a symbol representing an unspecified time period of the principle (a meta-variable), or a simple item of the principle that is manipulated without relating to its feasible intuitive interpretation.

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TRUE/FALSE. an inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.

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The following statement "An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be" is true.

A company's inventory is any resource or item that is currently in use. An inventory system is a collection of policies and controls that keeps track of inventory levels and decides what levels should be kept when stock needs to be refilled, and how big orders should be.

The proper quantity of inventory should be kept on hand to meet demand, and you should try to keep your storage costs to a minimum. Inventory analysis may help you with this. The item that a business expects to eventually sell to its clients is represented by inventory, which is an asset on a balance sheet.

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How can you encourage people to participate in activities?.

Answers

Pay close attention to what you hear.

Spend some time listening and exercising patience.

Build relationships with friends and family.

What can you do to motivate individuals to engage in activities?Getting People InvolvedSetting the Scene Describe Your Process for Judging Participation.Enable Students to Prepare. Ask for written responses or unprompted writing.Encourage students' thinking. Do not ask pre-programmed or yes/no questions.Display Your Interest. Provide nonverbal support.Cooperate with all. Understand the person you are calling.

What are the top  motivators for people

Power. Some people are driven by things like fame, power, and self-improvement. Some people are unmistakably driven by self-mastery — the drive to learn and advance — as much as by the need for winning, praise, and recognition.

Engagement with others, financial gain, and passion.

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true or false: sales promotions stimulate consumer purchasing and dealer interest by means of long-term activities.

Answers

It is true that sales promotions stimulate the consumer purchasing and dealer interest by means of long-term activities.

What is sales promotion?

Promotional mix components include sales promotion. Advertising, direct marketing, personal selling, and publicity/public relations are the main components of the promotional mix. Sales promotion is the use of media and non-media marketing communications for a set, limited amount of time to increase market demand, consumer desire, or product availability. Contests, discounts, freebies, loss leaders, point-of-purchase displays, premiums, prizes, product samples, and refunds are a few examples. Customers, salespeople, or members of the distribution chain can all be targeted through sales promotions (such as retailers). Consumer sales promotions are advertisements for products and services aimed at consumers. Trade sales promotions are advertising campaigns that target retailers and wholesale.

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which of the two methods would you select for estimating the average yearly income of all 6,826 members of the class of 2011? explain your reasoning by comparing the two methods and the effect of each method on the estimate.

Answers

I would select the survey method for estimating the average yearly income of all 6,826 members of the class of 2011.

What is method?
A procedure connected to a message and an object is considered as a process in object-oriented programming (OOP). An object is made up of state information and behaviour, which together make up the interface that outlines how any of the object's various consumers may use it. A method is indeed a consumer-parametrized behaviour of an object. Behaviors have been represented as methods, while data is depicted as an object's properties. For instance, a Window object may have properties like open and close as well as methods like open and close, and its state (as to if it is opened or closed at any given time) would be a method.

This method allows for a more accurate estimate as it is based on the responses of the members of the class, rather than relying on estimated figures. Furthermore, the survey method allows for the collection of more detailed information, such as the job titles and industries of the respondents, which can help to pinpoint the most accurate estimate.

In comparison, the second method of using the average income of all college graduates would not provide an accurate estimate of the average yearly income of the class of 2011, as it is based on the average of a wider group and does not take into account any specific information about the class of 2011. Furthermore, the average income of all college graduates may not be reflective of the actual average income of the class of 2011, as there may be discrepancies in terms of the job opportunities, industries and other variables that can affect the average income.

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as healthy people leave an insurance pool, premiums rise, which cause more people to leave the pool and even higher premiums. this describes:

Answers

Unfavorable selection's impact on insurance rates. Rates must increase when healthy people leave the covered pool, which forces more people to quit the pool and raises premiums even further. a shift in conduct that happens once someone develops a dislike of losing.

How does risk sharing apply to medical coverage?

In a plan as a whole or within a premium rating group, it is possible to balance out the higher expenses of the less healthy with the relatively lower costs of the healthy.  Generally speaking, the premiums might be more stable and predictable the larger the risk pool.

What causes price increases for health insurance?

The risk of insuring the average American rises as the number of health issues affecting the country's population does. The cost of annual health insurance premiums also rises in direct proportion to risk.

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