longer-term bonds are higher than shorter-term bonds’. The term structure of interest rates should be graphed as a curve line of zero-coupon bonds‚ in fact‚ it describe the relationship between matures and coupon date. Using the date provided in the case‚ we can construct the following three yield curves: a. COUGARs Strip Yield Curve This is the adjusted COUGARs strip yield curve that takes the discounted rate (8.11%) into account. The adjustment is necessary because the prices provided
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1)What is the development and growth ?How differ from each other? Growth is referred to the increase of per capita real gross domestic product over a period of time. Real GDP is a quantitative concept since it involves increased productive capacity in an economy‚ which leads to rising national output‚ incomes and living standards over time. Growth can occur from two main factors: 1. The increased use of resources such as land‚ labour‚ capital and entrepreneurial resources due to improvements in
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event‚ perhaps we could afford to be that narrow minded. But that is not the way life works. Life has a learning curve Have you ever accomplished anything worthwhile that only required one attempt to get it right? Have you ever seen a baby go from crawling to walking without ever falling down in the process? Falling down is part of learning to walk because there’s a learning curve. “You got to learn how to fall‚ before you learn to fly” -Paul Simon This means that most successes will be
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as control of inflation‚ investment as well as employment. Interest rates refer to the price paid by deficit agents for borrowing funds from the surplus agents. A line that plots interest rate at a set point in time is the term structure or yield curve. Interest rates which may be short term or long term are linked to a government’s macro-economic policy and future expectations of such a policy .The UK government uses Treasury bill and bond prices to implement its monetary policy. Bills‚ which are
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1. Economies of Scale. If the firms produces in an industry with very high fixed costs‚ consumers can benefit from a large firm which can exploit economies of scale. Economies of scale lead to lower long run average costs and therefore give the potential of lower prices. Example: Would you want several firms providing tap water? Would it make sense to have 2-3 companies laying a network of water pipes and sewage systems across the country? No. It is better to have 1 firm. This is an example of
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6.1a) A monopoly is facing the demand and marginal cost curves which is P = 12 - 0.002Q and MC = 3 + 0.001Q. When the demand curve is P = a- bQ‚ the marginal revenue curve will be MR = a- 2bQ ‚ therefore‚ MR = 12 - 0.004Q.(Refer to figure1) Figure 1 To maximize the profits‚ the company should produce at the output level where marginal revenue is equal to marginal cost. If the marginal revenue is higher than marginal cost‚ the firm can increase profit by producing more. If
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ijokl Interest Rates and Required Returns As noted in Chapter 2‚ financial institutions and markets create the mechanism through which funds flow between savers (funds suppliers) and borrowers (funds demanders). All else being equal‚ savers would like to earn as much interest as possible‚ and borrowers would like to pay as little as possible. The interest rate prevailing in the market at any given time reflects the equilibrium between savers and borrowers. INTEREST RATE FUNDAMENTALS The
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Part 1 : Demand For Goods and Services Definition of demand Classification of Goods and Services Law of demand Factors That Influence Demand (Determinants of demand) Definition of demand One of the definition of demand is known as the desire to buy goods and services with the ability to pay at a given time period. Classification of Goods and Services From conventional Economic Perspective: i) Free goods – zero production cost. i.e. rain water and air ii) Public
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BEA111 Online Quizzes 1-6 Quiz 1 1. Economics is best defined as the study of how A. prices and quantities of goods and services are determined in markets B. private firms and households respond to taxes and subsidies C. people make choices in the presence of scarcity and the results of those choices. D. interest rates and exchange rates are determined 2. The scarcity principle implies that A. people will never be satisfied with what they have B. as wealth increases
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context of the production possibilities curve‚ opportunity cost is measured in: a. Changing in technology b. Ringgit paid for the goods c. The value of the resources used d. The quantity of other goods given up 4. If an economy is producing at full employment‚ it means that: a. The economy is producing at a point to the left of the production possibilities curve b. The economy is producing along its production possibilities curve c. There are idle resources in this
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