Homework Assignement Five

This week we talked about Prediction Markets. They are an interesting phenomena that is manifested directly from public speculation. I decided to go with the website our teacher had shown us, http://www.intrade.com/. In Prediction Markets people place bets on the probability of an event occurring. For example, I could invest in a prediction market related to whether or not Obama's new health care system will pass before the end of December 2009. Our teacher gave us the task of analyzing markets that we found appealing and to wager "fake money" on certain predictions.

I was interested in several of the following categories:

1)Surrogates to gross OVER $16.0M in opening weekend.

The current bid is 92.5 percent. I believe this number could grow higher because science fiction movies are a huge industry. Also there has been ample advertisements for the movie. Also there are no other "big movies" debuting at the same time.

2)Osama Bin Laden to be captured/neutralized by 31 Mar 2010.

They are currently asking for 7.0 percent. I believe the number could be lower. They have not find him yet and cannot even confirm what country he is in.

3)Average national price for regular unleaded gas to be $3.25 per gallon or more on 30 Nov 2009.

This poll has not been tabulated yet and I believe that the odds will be less then 50% considering the states of the economy.

4)Japan to announce it has acquired a nuclear weapon before midnight ET on 31 Dec 2011Japan to announce it has acquired a nuclear weapon before midnight ET on 31 Dec 2011.

They are currently asking for 28.0 percent. I believe the number could grow lower due to its relations with the United States, its lack of political turmoil, and the growing control the United Nations.

5)The Freedom Tower to be officially opened before midnight ET on 31 Dec 2013.The current number is 62.o percent. I believe this value could lower because this building is supposed to be bigger then the world trade center. The WTC is a very large building and would take lots of capitol ( in a stagnant ecnomoy) and lots of man hours.

6) Public Enemies to win the Oscar
The current number is 7.3. I believe the possibility of this occurring is zero. I have seen the movie and do not believe it was up to par with any recent Oscar Winners.

7)Higgs Boson Particle to be observed on/before 31 Dec 2010
The asking price is 25.0. I believe this possibility should be lower. They started the LHC for only a few months and it failed. There will be more kinks in the LHC itself. It is an extremely complicated instrument. The repair for any problems can provide long delays because the magnets must be heated up to reasonable temperature for repair. When the LHC is running the magnets are kept at a very cold temperature.

8)Lindsay Lohan bares all for Playboy
This current asking price is 87.0 I believe this price should be much lower. I think people are taking into account her reckless behavior, but I have not heard much tabloid news about her. Perhaps she is finally cleaning up her act.

9)China agrees before end of 2009 to binding target limiting CO2 emissions.
The current asking price is 34%. I believe the money should be much lower. China does not like to abide by other countries regulations. It still uses more coal then any country in the world. This kind of dependence causes a transition to be very slow and tedious.

10)A magnitude 9.0 earthquake to occur anywhere on/before 31 Dec 2009.
The current asking price is 4.8%. I believe this number should be lower. 9.0 magnitude earthquakes are very rare because they are soo strong. I believe there will be some very deadly earthquake between this time but I do not think it will be that strong.

......Surrogates to gross OVER $16.0M in opening weekend.
I believed that 9 out of 10 of my "interesting markets" bids were too high. The prediction market concerning Surrogates gross over the opening weekend was the only price that was not too high. I believed that the possibility will be 100%. 16 Million dollars is not that high considering inflation and the market Sci-Fi movies have. This was the only market I invested in because I believed that all other prediction markets I was interested in were already valued to high. I was given 5000 dollars of play money. I decided to spend about 2000 dollars of my money on this prediction market. I bought 300 "shares" at 85 dollars a piece. The total amount spent was 1980 dollars.