Economics week 1 Questions
The central economic problem is that there are limited resources and unlimited wants in the
economy. Because of this, resources are considered scarce because the unlimited wants
exceed the limited resources. The opportunit
A corporate bond with a face value of $1,000 a
nd a coupon rate of 7.5% paid semi-annually, s
ells for $949.90. If the yield to maturity of simi
lar bonds is 8.2%, how many years does this b
ond have until it matures?
Assume the effective annual interest rate is 11
%. Calculate the present value of an annuity of
12 annual payments where the first payment i
s in 4 years and each payment is $6,000.
The present value of an
You want to invest $50,000 in a portfolio with
a beta of no more than 1.4 and an expected
return of XX%. Bay Corp has a beta of 1.2 and
an expected return of 11.2%, City, Inc. has a
beta of 1.8 and an
We expect a cash flow of $80,000 in 85 days. Giv
en a discount rate of 5.75% per year compounde
d semi-annually, what is the present value of this
Five months from today your company will begin
Caramel Corporation is expected to pay quarterl
y dividends of $0.35 per share. The dividend am
ount is expected to remain constant for the fores
eeable future. Given the risk of investing in Cara
mel shares, the re
Global corp had a total sales of $186.7 mil in yr 2011. In 2012
Global is assuming an aggressive marketing campaign and sales
are projected to be 15% higher. However, the operating margin
will fall from 5.57% t
You own a put option on Ford stock with a
strike price of $10. The option will expire in
exactly 6 months time.
A. If the stock is trading at $8 in six months, what
will be the payoff of the put?
B. If the stock i
Week 9 Tutorial Questions:
What is market failure? How can government intervention correct for market failure? Does
government intervention always improve on market failure?
- Market failure occurs when there is an inefficient allocatio
Economics Week 4:
Technology: The processes a firm uses to turn inputs into outputs of goods and services.
Technological change: A change in the ability of a firm to produce output with a given
quantity of inputs.
Firms have an incentive to hold as few in
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Economics Tutorial Questions
What is the law of demand? Use the substitution effect and income effect to explain why an
increase in the price of a product causes a decrease in the quantity demanded.
- The law of demand is referred to as the
Economics homework week 5
Q 2.7For Simon OBriens pizza restaurant, explain whether each of the following is a fixed cost or a
- Variable costs change as the quantity of output changes. Eg. Labor costs, raw material costs,
Tutorial Questions Week 7:
Why is the demand curve for labour downward sloping?
- Demand curve for labor = marginal revenue product curve of labour.
- It slopes downward because the marginal product of labor eventually diminishes.
Econ Week 6 Tutorial Questions:
What is the relationship between a monopolists demand curve and the market demand
curve? What is the relationship between a monopolists demand curve and its marginal
- If a producer had a monopoly, bot