that supply is fixed then at any given quantity of money (M1) there will be a corresponding demand that varies inversely to the price level‚ i.e. a downward sloping demand curve and there will be an equilibrium price level that ‘clears the market’‚ i.e. demand equals supply. If the quantity of money is increased (M2) the demand curve will shift to the right‚ i.e. at the same price level demand will increase but‚ again‚ supply is fixed. A new equilibrium will be established at the same level of output
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Leadership or Dominant Firm Model I think this model is easiest to learn diagrammatically‚ and then mathematically. Here is the graph and then an explanation of what is happening: Notice first the total market demand curve for the industry as a whole. Then notice the marginal cost curve for the competitive fringe of firms. This is a model in which there is one firm which is dominant and then a fringe of small firms who are so small that they behave like perfectly competitive firms – they take the
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Problems and Solutions 1 CHAPTER 1—Problems 1.1 Problems on Bonds Exercise 1.1 On 12/04/01‚ consider a fixed-coupon bond whose features are the following: • face value: $1‚000 coupon rate: 8% • coupon frequency: semiannual • maturity: 05/06/04 • What are the future cash flows delivered by this bond? Solution 1.1 1. The coupon cash flow is equal to $40 8% × $1‚000 = $40 2 It is delivered on the following future dates: 05/06/02‚ 11/06/02‚ 05/06/03‚ 11/06/03 and 05/06/04. The redemption value
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creating the interest rate-sensitivity gap report? Limitations in the reliability of the interest rate-sensitivity gap as follows: Gap analysis does not capture basis risk or investment risk‚ is generally based on parallel shifts in the yield curve‚ does not incorporate future growth or changes in the mix of the business‚ and doest not account for the time value of money. Moreover‚ simple gap analysis (based on contractual term to maturity) assumes that the timing and amount of assets and liabilities
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Subject Review Questions and Solutions 1. Capital markets may operate under auction‚ over-the-counter or intermediated modes. Distinguish between these types of operation. Auction markets require the financial asset to be identical in terms of risk and cashflow & liquidity – the assets are then traded on a centralised exchange where all parties know prices – an example is the stock exchange – each share in a particular company is identical to all the others therefore you can have an auction
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An increase in demand for the product d. Reduction in excise taxes e. Reduction in interest costs 5. Which of the following is the supply curve under perfect competition? a. marginal cost curve b. average cost curve c. marginal cost curve above shut down point d. marginal cost curve above break- even point e. average variable cost curve 6. U shape of Long Run Average cost is due to the incidence of a. External economies of scale b. Internal economies of scale c. Internal
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workers to the size of the labour force: 1‚000‚000 / 23‚000‚000 = 4.3 %. 4. a) The poor who are at minimum subsistence and who aspire to middle class consumption patterns: This group values income highly relative to leisure‚ so the indifference curve is relatively flat. As the wage increases‚ the income constraint line rotates clockwise‚ and we would expect a relatively large increase in hours worked. This response is dominated by a substitution effect‚ but there may be a small income effect
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Bond Pricing Based on Nelson-Siegel Model ——An Analysis of Varied Parameter τ Introduction Nelson and Siegel (1987) suggest to fit the forward rate curve at a given date with a mathematical class of approximating functions. The model precisely reflects the expected YTM with a flexible yield curve in the Term Structure Theorem. In this paper‚ we test the fitness of NS model and try to evaluate how deeply the NS model performs with different types of bonds via sampling and comparasion. We focus on
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Principles of Miroeconomics - Final Exam Instructions Please put your name and the course information on the scantron (ECON 2302 Professor J. Bikis) Please put your DBU ID number on the scantron in the area market "ID NUMBER" Please write your webadvisonr id on the back of the scantron in the area marked "WEBADVISOR ID". (This ID is the same ID that you use to get into your DBU email or into BlackBoard) Please select the best answer for each question given and fill in the respective answer
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money to build a brand. When companies have to spend resources to build brand‚ they have fewer resources to compete in the market. These costs positively affect USAA Ex. When the learning curve is high‚ new competitors have to spend time and money studying the market before to compete effectively. High learning curves positively affect profits Ex USAA If barriers are high‚ it is
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