2.
CH.15
If the company uses cumulative voting, the board of directors are all elected at
once. You will need 1/(N + 1) percent of the stock (plus one share) to guarantee
election, where N is the number of seats up for election. So, the percentage of
the

Numerical Problems
1.
Sd Y Cd G
(a)
Y (4000 4000r 0.2Y) 2000
6000 4000r 0.8Y.
(b) (1) Using the equation that goods supplied equals goods demanded gives
Y Cd Id G
(4000 4000r 0.2Y) (2400 4000r)
2000
8400 8000r 0.2Y.
So 0.8Y 8400 8000r, or
8000r 8400

Numerical Problems
1.
The following table shows the real wage (w), the effort level (E), and the effort per unit
of real wages (E/w).
w
8
10
12
14
16
18
E
7
10
15
17
19
20
E/w
0.875
1.00
1.25
1.21
1.19
1.11
The firm will pay a wage of 12, since that wage

EViews
Mathematical Statistics II
2
EViews (1/3)
File Open Foreign data
as workfile
Step3 of 3
Basic structure
Dated/regular frequency
Frequency
Start date
*
Eviews
3
t , 1 ,
k
1 ,
= 1
(),
:
= 1
=
1
: GDP, GDP

Analytical Problems
1.
Figure 8.6 illustrates the business cycle. The current NBER method picks peaks and troughs in the level of
aggregate economic activity, which are points on the figure where the slope of the line is zero. These are
shown in Figure 8.

Econ 3161, Fall 2015
Public Finance (I)
Prof. Hui-chen Wang
Problem Set 1
Part I. Rosen and Gayer 10th eds, end-of-chapter discussion questions
Chapter 1: Questions 1, 6.
Chapter 2: Questions 3, 4, 7
Chapter 3: Questions 4, 12, 14
Chapter 1
Q1.
a. McCains

Analytical Problems
1.
(a) The temporary import restriction increases net exports. Since it raises the
demand for domestic goods relative to foreign goods, the real exchange rate
increases. The rise in the exchange rate mitigates somewhat the increase in

The Black-Scholes
Formula
Jow-ran Chang
Department of Quantitative
Finance,
National Tsing Hwa University
105/10/16
1
OUTLINES
1.
2.
3.
4.
105/10/16
The Black-Scholes Formula
Options on Stock Indices, Currencies,
and Futures
The Greek Letters
Exotic Optio

Numerical Problems
1.
Initial balance sheet of banks (all amounts in florins):
Reserves
ASSETS
500,000
LIABILITIES
Deposits
500,000
Banks want to hold reserves equal to only 20% of deposits. This is 0.20 500,000 100,000. So they
have 400,000 theyd like to

Numerical Problems
1.
The price level in the West is PW = 5 guilders per ordinary soap bar. The price level
in the East is PE = 100 florins per deluxe soap bar. The real exchange rate is 2
ordinary soap bars per deluxe soap bar.
a.
Use the formula enom =

1.
a.
CH.16
A table outlining the income statement for the three possible states of the
economy is shown below. The EPS is the net income divided by the 5,000
shares outstanding. The last row shows the percentage change in EPS the
company will experience

1.
a.
The maximum price that the company should be willing to pay for the fleet of cars
with all-equity funding is the price that makes the NPV of the transaction equal to
zero. Discounting the depreciation tax shield at the risk-free rate, the NPV equati

CH.7
1. a. Using M&M Proposition I with taxes, the value of a levered firm is:
VL = [EBIT(1 tC)/R0] + tCB
VL = [$975,000(1 .35)/.14] + .35($1,900,000)
VL = $5,191,785.71
2.
b.
The CFO may be correct. The value calculated in part a does not include the
co