RESPOND TO DISCUSSION QUESTIONS. 160 WORDS EACH
F1. What are the advantages and disadvantages of using collateral to secure long-term financing?
F2. What are the differences between short- and long-term financing? What are some of the popular types of short-term financing available to small businesses?
M1. You are seeking medical advice for an experimental treatment that may improve your life expectancy. The doctor informs you the probability of success after the treatment is 60% to live 20 more years and the probability of failure is 40%. If it fails, you will die and if you do nothing you will live less than the 5 years. Based on the expected value of this situation, what would you decide? Do you agree with this decision or not? Why?
M2. You are applying for a home loan. You have the choice between a fixed interest rate of 5% or a variable interest rate. For the variable rate, consider the probability distribution of 10% chance for a 1% interest rate, a 30% chance for a 4.5% interest rate, a 55% chance for a 7% interest rate, and a 5% chance for a 12% interest rate. If you were to graph this distribution, which component of central tendency and dispersion measures best summarizes the distribution? Why?
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