Homework 4

1. The prediction market I am choosing from www.intrade.com is 'The Republicans to control the House of Representatives after 2012 Congressional Elections'. It is currently at 79.2. I am also investing in 'Republican Party candidate to win 2012 Presidential Election,' which is at 41.8.


2. Top 10 other markets:
New Orleans to win Super Bowl XLV, which is on the practice market.
175+ banks to close during 2010.
Intrade.com to be in business on Dec 31, 2010.
The Google Lunar X Prize to be won on/before 31 Dec 2012.
Spotify to be launched in the United States before midnight ET on 31 Dec 2010.
Netflix to have 20.0 million (or more) subscribers at the end of 2011.
GM to deliver 500 Volts to dealers on/before 31 Mar 2011.
Central Park to have 35.0 inches (or more) of snowfall between 1st Oct 2010 - 30th Apr 2011.
Average Global Temperature for 2011 to be among five warmest years on record.
The Freedom Tower to be officially opened before midnight ET on 31 Dec 2013.

3. Current Prices of the above 10.
New Orleans to win Super Bowl XLV, which is on the practice market. - 48
175+ banks to close during 2010. - 45
Intrade.com to be in business on Dec 31, 2010. - 95
The Google Lunar X Prize to be won on/before 31 Dec 2012. - 38.7
Spotify to be launched in the United States before midnight ET on 31 Dec 2010. - 65
Higgs Boson Particle to be observed on/before 31 Dec 2014. - 30
GM to deliver 500 Volts to dealers on/before 31 Mar 2011. - 85
Central Park to have 35.0 inches (or more) of snowfall between 1st Oct 2010 - 30th Apr 2011. - 26
Average Global Temperature for 2011 to be among five warmest years on record. - 21.8
The Freedom Tower to be officially opened before midnight ET on 31 Dec 2013. - 45

It was hard to find a market that was "too low," with the exception of the first one, which I believe is a shoe in. The intrade.com one is very high, but it should ultimately close at 100, so that will make money. The rest are about what I would expect, but I think overall, they will go up.

4. I am going to split my $1000 between two markets. The Saints to win SB XLV, and Republicans to control the House of Representatives after 2012 Congressional Elections. So, Saints trading at 48, will cost 4.80 per share, giving me 104 shares. Republicans trading at 79.2 will cost 7.92 per share, giving me 63 shares. That comes out to 998.16. So, I'll have 1.84 left over, which will go toward my lunch tomorrow.