ECON 106M
ANSWERS TO HOMEWORK 4
1. A German sports car is selling for 70,000 euros. What is the dollar price in the United States for
the German car if the exchange rate is 0.90 euros per dollar?
Solution:
70,000 euros ($1/0.90 euros) $77,777.77.
2. An in
Prof Aaron Tornell
106ML
Spring 2014
LAB Presentations
The purpose of the lab course is to help students understand how theory connects to practice. In groups,
students will select from a list of topics, complete the required analysis, and prepare a set o
UCLA ECONOMICS
STUDENT PRESENTATION FEEDBACK GRID
Student: _
Topic: _
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Using Federal Funds Futures to Predict a Federal Funds
Rate Hike
Prof. Aaron Tornell
KeyYong Park
UCLA
Prof. Aaron Tornell KeyYong Park (UCLA)
Econ 106M
1 / 16
Determination of Federal Funds Rate
Prof. Aaron Tornell KeyYong Park (UCLA)
Econ 106M
2 / 16
Sh
Financial Markets and Financial Institutions
(Economics 106-M and 106-ML)
UCLA
Department of Economics
Prof. Aaron Tornell
Fall 2015
COURSE OBJECTIVES
This course uses analytical tools of economics and finance to analyze macrcoeconomic policy
issues and p
TA Note Week6
1
1.1
Boom and Bust cycles
Fact
Claim 1 Crises are typically preceded by a real exchange rate appreciation, which means that
1
real exchan ge rate
PN
PT
goes up before the crises. After the crises, real exchange rate appreciation slows down
TA Note Week 8
1
Current Account and Debt dynamics
1.1
Some useful national accounting
GDP = C + I + G + (X
M)
Domestic absorption = C + I + G
GN P = GDP + N F P
TA = X
M = GDP
domestic absorption
CA = T A + N F P = GN P
domestic absorption
S(Savings) = G
ECON 106M TA NOTE for WEEK 7
February 24, 2012
Boom and Bust Cycles
1. Clarication on the amplifying mechanism (feedback loop)
This is the key to understand why crises are self-fullling. In an equilibrium where
N-sector agents face borrowing constraints a
ECON 106M TA NOTE for WEEK 5
February 10, 2012
Financial institutions and Asymmetric Information
1. Stylized facts
(a) Stocks are not the most important source of external nancing for business.
(b) Issuing marketable debt and equity securities is not the
ECON 106M TA NOTE for WEEK 3
January 27, 2012
Stock pricing
1. The one-period valuation model: To value the stock today, you need to nd present
discounted value of the expected cash ows (future payments) with the discount factor
equals to the required ret
"There are always three speeches, for every one you actually gave. The
one you practiced, the one you gave, and the one you wish you gave."
~ Dale Carnegie
Econ 106V
Effective Presentations
Shaun Tubbs
Program Specialist, Partnership UCLA
Agenda
1. Purpos
Econ 106M
Prof Aaron Tornell
Class Notes 1. Interest Rates and Bond Pricing (ME Ch. 3)
In class we will go over the following concepts. In this week sections, the
s
TAs will solve numerical exercises.
Present Discounted value: If the interest rate is i; t
ECON 106M
ANSWERS TO HOMEWORK 5
1. Short-term rates are 2% in Japan and 4% in the United States. The current exchange rate is 120
yen per dollar. What is the expected next periods exchange rate (yen per dollar)?
Solution: 0.04 0.02 (X 120)/120
X 117.6
2.
ECON 106M
HOMEWORK 3
DUE DATE Wednesday April 23, 5PM (hand in the homework to your TA)
The questions correspond to the material covered during week 3, chapters 5 and 13 of the ME book and
class notes.
1. The shares of Misheak, Inc. are expected to genera
ECON 106M
HOMEWORK 2
DUE DATE Wednesday April 16 (hand in the homework to your TA)
1.
You own a $1,000-par zero-coupon bond that has 5 years of remaining maturity. You plan on selling
the bond in one year and believe that the required yield next year will
ECON 106M
HOMEWORK 2
DUE DATE Wednesday April 16 (hand in the homework to your TA)
1.
You own a $1,000-par zero-coupon bond that has 5 years of remaining maturity. You plan on selling
the bond in one year and believe that the required yield next year will
ECON 106M
ANSWERS TO HOMEWORK 3
1. The shares of Misheak, Inc. are expected to generate the following possible returns over the next
12 months:
Return
5%
5%
10%
15%
25%
Probability
0.10
0.25
0.30
0.25
0.10
If the stock is currently trading at $25/share, w
Effective Presentations: A Quick Reference Guide
Presentations are something that were all familiar with. Whether you are watching a
presentation or giving a presentation, chances are you know what sucks and what doesnt.
However, in case you dont know the
Econ 106M
Prof. Aaron Tornell
Class Notes 2.
Interest Rates and Bond Pricing (ME Ch. 3)
Rate of return on a Bond.
In order to buy one bond at time t you need to pay pt .
The bond will pay at t + 1 a coupon ct+1
And you will be able to sell it at a price p
ECON 106M TA NOTE for WEEK 1
January 13, 2012
Interest Rates and Bond Pricing
1. Present Discounted Value: A dollar of cash ow paid to you one year from now is less
valuable to you than a dollar paid to you today. Hence you need to calculate todays
value
TA Note Week4
1
The determination of exchange rates in the long-run
1.1
Absolute purchasing power parity
If the law of one price holds, exchange rates between any two currencies equals the levels of relative average
prices between any two countries.
P US
ECON 106M
HOMEWORK 3
DUE DATE: Hand in a hard copy to the TA by Friday (October 14th) in Section.
1.
Suppose you purchased 5 futures contracts of the 10-year US Treasury Note with December maturity
at the close of October 3, 2016 and sold them at the clos
ECON 106M
HOMEWORK 1
DUE DATE: Hand in a hard copy to the TA by Friday (Sep 30) in Section.
1. Calculate the present value of a $1,000 zero-coupon bond with 5 years to maturity if the required
annual interest rate is 6%.
2. You are willing to pay $15,625
Georgy Zaytsev
Econ 106M
Homework 4A
1. Bad effects of low interest rate policy are:
a. Asset prices at dangerously unsustainable levels (stocks, bonds, real estate, etc.) Assets are
overvalued because investors are looking for yield and invest in riskier
Georgy Zaytsev (704429589)
Homework 6A
1. The yuans decline against the dollar was accompanied with yuans growth against other major
currencies, which indicates that the dollar is rising, not that the yuan is falling. A possible reason
for that is the inv
1. According to the article, the core (excluding fresh food) inflation in Japan is currently at negative 0.5
percent, which constitutes a deflation. At the same time, Bank of Japan wants to bring it up to at
least 2%, but they have not succeeded yet.
2. T
Homework 5A
Georgy Zaytsev
Q1. When Oberhelman became the new CEO, the post-recession demand for commodities was
increasing, and so was the demand for mining equipment, such as excavators, bulldozers, and dump
trucks. Caterpillar CEO decided that if Cater
Georgy Zaytsev
Homework 3A
1) There are several sources of uncertainty for the financial services industry:
a) uncertainty over the future interest rates,
b) concerns about Deutsche Banks liquidity and ability to absorb the regulators legal fines,
c) fall