ECON
hw5

# hw5 - Homework 5(Due October 11 1(a Explain why the real...

• Homework Help
• 1

This preview shows page 1. Sign up to view the full content.

Homework 5 (Due October 11) 1. (a) Explain why the real rental price must equal the interest rate (that is, R t /P t δ = i t 1 ). (b) In reality, we observe assets with di ff erent returns. Does your explanation in part (a) con fl ict with such observation? 2. Verify the claim of zero pro fi t (see page 7, formulas 5) either through a numerical example or through a general arguement. (This actually has been done in formulas 1. But do it anyway.) 3. [page 12, 3] NQ 1 (a, b, c).
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 4. Refer to example 2, page 4, formulas 6. Solve the optimal ( c 1 , c 2 ) . (The formula for c 1 is already given in the last line of that page.) 5. Refer to example 3, page 5, formulas 6. Solve the optimal ( c 1 , c 2 ) . (The formula for c 1 is already given in the last line of that page.) 6. Refer to case 1, page 6, formulas 6. Answers three questions in the end of that page. 1...
View Full Document

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern