Lecture%2019%20-%20Midterm%20II%20review

Lecture%2019%20-%20Midterm%20II%20review - FIN 580 FE...

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    1 FIN 580 FE Financial Economics Midterm II Review Professor Nolan Miller
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    2 Announcements Problem Set #6 is due today.  Answers will be posted later today. Problem set return: MSFE: In class. MSF: in mail folders in Wohlers 330. Plan for today: “Review” Questions
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    3 Midterm II The second midterm is on Thursday, October 28, 2010. MSFE: 8:00 am – 9:20, Wohlers 240. MSF: 7:00 pm – 8:20. MSF1 (9am): BIF 3007 MSF2 (12:30): BIF 3041 Due to the limited number of seats, it is critical that you attend the class session for which you are officially  registered. The format and ground rules for the exam will be similar to the first midterm. 80 minutes, 80 points. Mix of multiple choice, computational, short answer. Probably “slightly shorter”. Multiple choice will use scan-tron forms.  So, please BRING A #2 PENCIL AND AN ERASER. Calculators OK, but use for arithmetic only.  Do not program in formulas! The exam will focus on material covered since the first midterm. The questions will not deal exclusively with material from before the first midterm. But, to the extent that recent topics use ideas from before the first midterm, questions may require you to apply  those ideas.
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    4 Material Eligible for the Midterm Lectures 11 – 18. Lecture 11: General Equilibrium, Intertemporal Consumption. Lecture 12: Intertemporal Consumption Lecture 13: finish intertemporal, start uncertainty. Lecture 14 – 16: uncertainty. Lecture 17 – 18: Externalities. Cap and Trade and Public Goods NOT on midterm.
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    5 Topic 1: General Equilibrium
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    6 GE: The very big picture Suppose that there are many goods in the economy. In the beginning, consumers own some of the goods. Firms have production techniques that turn some goods into others. If a firm wants to use a particular good as an input, it must buy it from the consumer. If a consumer wants to consume a good, it must buy it from a firm. Each good has a single price. If the good is an input, this is the price at which consumers sell it to firms. If the good is an output, this is the price at which firms sell to consumers. Or both … Let p = (p 1 ,…,p N ) denote the vector of prices of these goods.
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    7 GE: The very big picture The rest is just an accounting exercise. Total good i available for consumers: (endowment) – (used as input to production) + (created in production) e i  – z i (p) + y i (p) If the market clears, then: total amount consumers consume = total amount available.
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Lecture%2019%20-%20Midterm%20II%20review - FIN 580 FE...

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