011 would be more or less Willing to
" POIarOId stock in the following situ-
_ ' fit-:12) appreciate in Value.
* ket becomes more liquid.
g"- d. 130 appreciate in value.
'L 121d market become more volatile.
12. Explain What effect a large federa

6
Job Mobility/Migration
Immigration is a highly controversial topic in many parts of the world. Typically richer countries worry about migration by citizens of poorer countries. Hong
Kong worries about immigration from mainland China. The main topic of c

12.2)
The cash flows from the project (in $ millions) have the following tree diagram:
1000 or 500
PVu
PV0
200 or 100
PVd
-500 or -250
Using the formula = [(1+rf d)/(u d)], the tree diagram for the risk neutral probabilities
derived from the returns to in

INTEREST RATES AND
THE LOANABLE FUNDS
Nominal and Real Interest Rates
Nominal return represents how much money you will
receive after 1 year for giving up 1 dollar of money today
Real return represents how many goods you can buy if
you give up the oppor

Week 4 Tutorial Questions
11-21.
11-26.
Suppose Intels stock has an expected return of 26% and a volatility of 50%, while Coca-Colas has an expected
return of 6% and volatility of 25%. If these two stocks were perfectly negatively correlated (i.e., their

Sample questions for Midterm
(Answer key will be posted on Wednesday, Oct. 17, 2012)
Part A: True or False Statements. Label each of the following statement true, false, or uncertain.
Explain your answer. (5 marks each)
1. According to the Fisher hypothes

12.2)
The cash flows from the project (in $ millions) have the following tree diagram:
1000 or 500
PVu
PV0
200 or 100
PVd
-500 or -250
Using the formula = [(1+rf d)/(u d)], the tree diagram for the risk neutral probabilities
derived from the returns to in

* cfw_ Problems may be dicult.
Practice Exercise Set I
(1) Describe
the
sets whose points satisfy the following relations
z 1
(a) z + 1 = 2
(b) jz + 1j jz 1j < 2
(c) jz 2 1j = 1
(d) arg zz + 1i = 3
(2) Given three distinct complex numbers , , . Show tha

Part C: Long Question.
1. (20 marks) A consumer has non-human wealth equal to US$500,000. She earns
US$80,000 this year, and expects her salary to increase by 2%, 3%, and 4% in real terms
in the following three years. She will then retire at the age of 65

NAME
CHAN, Wai Lam
2303
NAME
CHAN, Ching Nga Jodie
2303
CHAN, Kam Wai
2304
CHOI, Ka Hei
2303
CHAN, Ming Hong
2304
DING, Lijun
2303
CHAN, Yun Kiu
2304
EFFENDI, Fiona Citra
2303
CHEUNG, Chui Wu
2304
HUANG, Yuelun
2303
CHEUNG, Kai Ping
2304
HUANG, Yuxi
2303