S207-S212-Ch22-SM2.qxd 6/2/08 11:53 AM Page S-207
Topics in International Macroeconomics
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1. (PPP) Richland and Poorland each have two industries, traded TVs and nontraded house maintenance.The worl
Answers to End of Chapter Questions 5
1. Forward versus Futures Contracts. Compare and contrast forward and futures
contracts.
ANSWER: Because currency futures contracts are standardized into small
am
Chapter 6
Government Influence on Exchange Rates
Lecture Outline
Exchange Rate Systems
Fixed Exchange Rate System
Freely Floating Exchange Rate System
Managed Float Exchange Rate System
Pegged Exchang
1a)Figure 1 and Graph of Good Ys L
The Heckschler Owen model predicts that when trade is liberalized in the long run when labor
and capital are transferable, the owners of the factor used intensively
Return The yield from figure 3.1 is the intercept of the horizontal axis
when the NPV is graphed. Example 8: Find the internal rates of return
(yields) of the following cash flows: (a) -100, 125 (b) -
Summary 6.0 Tutor Marked Assignment 7.0 References / Further
Readings 1.0 INTRODUCTION In this unit we shall be making use of the
various mathematical tools and the basic knowledge of finance
discusse
experience and observation. The term model is well known to
children, economists, scientists and all alike who use the term in much
of the some way that children do. 26 A childs model automobile or
ai
analogue and mathematical modeling. 6.0 TUTOR-MARKED
ASSIGNMENT 1. List and explain the types of models that are useful to
operations managers. 2. Given that P=N3, AVC (Average Variable Cost) =
N1.80
summarizing all that we have covered so far. 5.0 SUMMARY Following
the unit covered in this block, the following points should be noted: 1.
The present value is more focusing on the time value of mone
root. Hence, = 1 + r* = 1.2124 r* = 1.2124 1 r* = 0.2124 0r 21.24% In
conclusion, since the yield is positive and also greater than 10 or 20%,
the investment is worthwhile, and should be accepted. If
to maximize profit, output, returns to mention but few. Dual
programming on the other hand involves decisions to minimize risk,
space, time and cost to mention but few. Either way, a linear
programmin
accrued. The formula is: Where: = Interest = Principal 63 = Percentage
rate of intrest = time Example 1 Find the interest payable on an invested
capital of N4,500 at 9.5% for the period of 6 years, an
therefore used to weed away unnecessary detail and reduce the
complexity of reality. In a simple two-variable model, the variable to be
explained is connected to one believed to be largely responsible
10e0.12 = N11.27 3.2.1 Effective Interest Rate An effective interest rate
is a method that is used to appraise different investment opportunities,
and it is just the rate of simple interest earned ove
information. It is very easy to compute especially when it involves two
decision variables. But where it has more than two decision variables,
the simplex method would be used. It should also be noted
of time on investment analysis in this unit. 2.0 OBJECTIVES The aim of
this unit is to be able to: Explain what simple and compound interests
are. 62 Understand how simple and compound interests can b
amount borrowed by Ajibola from Ogundipe is called the Principal. The
sum of interest and principal is therefore the total amount. The rate
percent per annum is the interest payable for one year. In a
Leon Wolf, the editor of the conservative site RedState.com, told
The Daily Beast shortly after Cruz dropped out that hes
considering a Clinton vote.
If its a competitive election, I probably will be
After sending the military into Cuba a few times, the US decided to
give a whirl to this little system of a dictatorship. With US backing,
General Fulgencio Batista rose to power in the 1930s as Cuba'
multiplied by their respective unit return or cost. 4. Set of constraints:
The constraints are all expressed as functions of the variables chosen. 5.
Conversion of all inequalities: All the inequaliti
more meaningful and easily understood. This is more glaring in the
development of mathematical models in financing. 4.0 CONCLUSION
The summary of what we have covered so far in this unit is highlighte
= N10(1.01) 12 = N11.27 (e) If the interest is compounded weekly then
an interest of 12/52 = 0.23% is added on every week and, since there
are 52 weeks in a year. 68 S = N10 (1.0023)52 = N11.27 Follow
A model is a representation of a real life situation. It is an approach to
simplify the complexities involved in human endeavours. Perhaps, it
provides a means to an end whereby one moves from general
performance is to determine the worth of the business. The techniques
would include the use of discounted and nondiscounted methods of
evaluation. The discounted methods are Net present Value (NPV),
I
Excellent resources The Universitys Templeman Library houses a
comprehensive collection of books and research periodicals. Students
on our actuarial science programmes also have the opportunity to gai
focus of finance is also to identify risk and return of a business or
project. 6.0 TUTOR-MARKED ASSIGNMENT 1. Explain the term
risk/return trade off. Of what significance is the financial system to an
highest return. 3.0 MAIN CONTENT 3.1 Meaning and Types of Linear
Programming Linear Programming has been necessitated by the fact
that resources are scarce. For every investor, he seeks to either
maxi
mathematical formula or equation can be used to compute the
breakeven point for a business: b= FC (P-V) Where: b= break-even point
P= Price or average revenue per unit V= Unit Variable Cost FC= Total
the investment more frequently than this. Example 4 A principal of N10
is invested at 12% interest for one year. Determine the future value if
the interest is compounded. (a) Annually (b) semi annuall
pay at the end of 3 years is: or simply multiply per year by The total
amount the couple will pay at the end of three years will be: Principal
Amount + Interest on the loan mount SELF ASSESSMENT EXERC
committed to developing a world-class research environment. In the
most recent Research Assessment Exercise, our work in Statistics was
ranked among the top ten universities in the UK. The Centre for
method basically makes use of iteration technique. 6. Linear
Programming follows systematic stages of formulation. 6.0 TUTOR
MARKED ASSIGNMENT 1. Explain the concept of linear programming.
Of what us
2,900 17 2,300 20 2,000 5. Is finance a science or an Art? Discuss with
reasonable examples as much as you can. 6. Why is finance and
mathematics viewed from the perspective of inductive reasoning? 7.
altogether. (c) Certainty: The method prohibits probability. The stated
conditions are assumed to follow precisely the given mathematical
expressions. (d) Divisibility: The values of the decision vari
students with a good first degree (upper second class or above) in
mathematics, statistics or economics (or other subjects with a high
mathematical content), who wish to gain exemption from subjects i