Work on problem 1, 3 and 7 of the attached file.

CHAPTER 5 UHFM 7TH EDITION
Problem 1
    2/6/19    UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
            Chapter 5 -- Financial Risk and Required Return
    PROBLEM 1
    Consider the following probability distribution of returns estimated for a proposed project that
    involves a new ultrasound machine:
        State of the    Probability    Rate of
        economy    of occu
ence    return
        Very poor    0.1    -10%        12.00%
        Poor    0.2    0%
        Average    0.4    10%
        Good    0.2    20%
        Very good    0.1    30%                        Probability    Rate of    Expected rate of return
                                        of occu
ence (A)    return (B)    (A)* (B)
    a. What is the expected rate of return on the project?                                    0.1    -10%    -1.00%
    b. What is the project's standard deviation of returns?                                    0.2    0%    0.00%
    c. What is the project's coefficient of variation (CV) of returns?                                    0.4    10%    4.00%
    d. What type of risk does the standard deviation and CV measure?                                    0.2    20%    4.00%
    e. In what situation is this risk relevant?                                    0.1    30%    3.00%
                                        Total        10.00%
    ANSWER
                                        Expected rate of return on the project is 10%
                                        Expected rate of return
                                        (A)* (B)
    Copyright © 2020 Foundation of the American College of Healthcare Executives. Not for sale.                                    -1.00%
                                        0.00%
                                        4.00%
                                        4.00%
                                        3.00%
                                        10.00%
                                    Standard deviation    2.35%
                                    Mean    2.00%
                                    Coefficient of variation    Standard deviation/ Mean
                                    Coefficient of variation    117.26%
Problem 2
        UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
            Chapter 5 -- Financial Risk and Required Return
    PROBLEM 2
    Suppose that a person won the Florida lottery and was offered a choice of two prizes: (1) sure
    $500,000 or (2) a coin-toss gamble in which he or she would get $1 million if a head were flipped
    and zero if a tail.
    a. What is the expected dollar return on the gamble?
    b. Would the person choose the sure $500,000 or the gamble?
    c. If he or she chooses the sure $500,000, is the person a risk averter or a risk seeker?
    ANSWER
Problem 3
        UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
            Chapter 5 -- Financial Risk and Required Return
    PROBLEM 3
    Refer to Table 5.2 in UHFM.
    a. Construct an equal-weighted (50/50) portfolio of Investments B and C. What is the realized
     rate of return and standard deviation of the portfolio? Explain your results.
    b. Construct an equal-weighted (50/50) portfolio of Investments C and D. What is the realized
     rate of return and standard deviation of the portfolio? Explain your...