Asst. Prof. Ronald B. Paguta
2nd Term AY 2015-2016
National income accounting is an
essential activity that determines the
performance of the national economy
and its different sectors.
The fundamental identity of NIA relates
that: total production = tota
Asst. Prof. Ronald B. Paguta
2nd Term AY 2015-2016
MARKET EQUILIBRIUM
Market equilibrium is that state in
which both price and quantity are at
levels at which the amount firms want to
supply matches exactly the amount
consumers want to buy.
That price is
Asst. Prof. Ronald B. Paguta
2nd Term AY 2015-2016
Individual Markets:
Demand and Supply
A market is an institution or mechanism
that brings together buyers and sellers
of particular goods, services, or
resources.
or simply,
A market is a place, state, or
Asst. Prof. Ronald B.
Paguta
nd
Nature, Method and
Tools in Economics
Economics came from the Greek word
oikonomia (oikos = house + nomos =
custom or law) which literally means
household management.
Economics is a social science that deals
with the effici
Chapter 15Forecasting
MULTIPLE CHOICE
1. Time series methods
a. discover a pattern in historical data and project it into the future.
b. include cause-effect relationships.
c. are useful when historical information is not available.
d. All of the alternat
Basic Probability Concepts
Random trial
An activity that has at least two outcomes and it is not known in advance which outcome
will occur
Basic outcome
The different possible outcomes of a random trial
Sample space
The set of all basic outcomes
Event
A s
Review of Econometrics 1
Lecture Notes
June 14, 2009
1
Linear Regression as a Descriptive Tool
Given a set of n joint observations on k + 1 variables y, x1 , . . . , xk in tabular form:
y1
.
.
x11
.
.
.
.
x1k
.
.
yi
.
.
xi1
.
.
.
.
xik
.
.
yn
xn1
.
xnk
Th
Linear Regression and Correlation
We study the relationship between two variables, develop an equation linking the two and
help us estimate one variable from the other.
We often hear of questions like, is there a relationship between tuition fee increase
MANAGED, POOLED FUNDS
A mutual fund is a form of collective investment that pools money from many
investors and invests the money in stocks, bonds, short-term money market
instruments, and/or other securities in exchange for the shares of the
company that
FINANCIAL ENGINEERING
Financial engineering - bundling or unbundling of existing
assets or securities to create new ones with tailored or
different characteristics
Examples of financial engineering products:
Swaps, options, warrants, forwards, futures, as
Money Market
1. Suppose that the current Tbill rates are as follows:
91-days - 4.25%
182-days - 4.75%
364-days - 5.50%
Assume 364-day base year
a.If you will buy a 6-mo. Tbill right now, what would be its
price?
b.Suppose you bought the Tbill in (a). Afte
Option Sensitivites
Option prices can change due to directional
price shifts in the underlying asset, changes in
the implied volatility, time decay, and even
changes in interest rates. Each of these can
either help or hurt an investor depending on
the typ
SECURITIZATION
Securitization pooling loans for various purposes into
standardized securities backed by those loans, which
can be traded like any other security.
Is the process of restructuring and repackaging an
existing financial asset or a group of fin
Black-Scholes Pricing
The Black Scholes Pricing formula for call
options are given as
c S 0 N d1 Xe N d 2
rt
where,
d1
ln
S0
X
r t
2
t
2
ln S0 X r
d2
t
2
2
t d
1
t
Black-Scholes Pricing
Now consider a non-dividend paying stock
trading at $100 an
Capital Structure
Determinants of Capital Structure
Seasonal Variations
Tax benefit of Debt
Flexibility
Control
Industry Leverage ratios
Agency costs
Industry life cycle
Degree of competition
Company characteristics
Requirements of investors
Timing of pub
NAME:
ID:
SECTION:
QUIZ 2 FINANCIAL MANAGEMENT
1) Stock A has an expected return of 10% and a standard deviation of 20%. Stock B has an expected return of
13% and a standard deviation of 30%. The risk-free rate is 5% and the market risk premium, r M rRF,
PRACTICE PROBLEMS CHAPTER 6 INTEREST RATES
Interest rate levels
1. Which of the following factors would be most likely to lead to an increase in
nominal interest rates?
a. Households reduce their consumption and increase their savings.
b. A new technology
SILABO GERENCIA EMPRESARIAL
SYLLABUS FINANCIAL MANAGEMENT
UNIBE - FIU
Mission: To promote academic excellence, research, and the development of highly qualified
professionals with the required leadership, creativity, and ethical values to succeed in an ev
NAME:
ID:
SECTION:
QUIZ 2 FINANCIAL MANAGEMENT
1. Stock A has a beta of 1.2 and a standard deviation of 25%. Stock B has a beta of 1.4 and a standard
deviation of 20%. Portfolio AB was created by investing in a combination of Stocks A and B. Portfolio AB
1. Suppose you have $1,500 and plan to purchase a 5-year certificate of deposit
(CD) that pays 3.5% interest, compounded annually. How much will you have
when the CD matures?
a. $1,781.53
b. $1,870.61
c. $1,964.14
d. $2,062.34
e. $2,165.46
N
I/YR
PV
PMT
F
PRACTICE PROBLEMS TIME VALUE OF MONEY
1. Find the interest rates earned on each of the following:
a. You borrow $800 and promise to pay back $949 at the end of 1 year.
b. You lend $900 and the borrower promises to pay you $949 at the end of 1
year.
c. You
NAME:
ID:
SECTION:
QUIZ 2 FINANCIAL MANAGEMENT
1) The risk-free rate is 6% and the market risk premium is 5%. Your $1 million portfolio consists of $700,000
invested in a stock that has a beta of 1.2 and $300,000 invested in a stock that has a beta of 0.8
Different Types of Securities
While reading the different instructive, I was able to find different types of
securities that are issued by the central bank of the Dominican Republic. One of them
is a bond. A bond is an investment in which the investors lo
Chapter 1: Introduction
There are two types of markets in the economy. The first one is product
market, which is the market for manufactured goods and services. The other market is
the factor market, which is the market for factors of production. One part