f (tl) <tf(l) for all L and t>1. + u 0 [p (l ) α wl ] pα (l ) α 1 w =0 l =
|
|
- Dortha Cross
- 5 years ago
- Views:
Transcription
1 Econ 101A Midterm Th November 006. You have approximatey 1 hour and 0 minutes to answer the questions in the midterm. I wi coect the exams at sharp. Show your work, and good uck! Probem 1. Profit Maximization with Uncertainty (65points)AisonownsacompanyupinNapa that produces wine. Her income is given by the profits of the company that she runs. Aison is risk-averse, with utiity function u (c) satisfying u 0 (c) > 0 for a c, and u 00 (c) < 0 for a c. Aison maximizes her utiity from the profits of the company. Wine y is a abor-intensive operation. It is produced using abor with the production function y = α, with 0 <α<1. Workers in the vine are paid the wage w. Aison maximizes utiity from her ony income source, the profits from wine saes: max u [p α w]. (1) 1. Define the concept of returns to scae, that is, what we mean by constant/increasing/decreasing returns to scae. Under what conditions for α the production of wine has decreasing returns to scae? Show the steps of your reasoning. (Here assume ony α>0, from the next point on assume 0 <α<1) (4 points). Consider the maximization of utiity of Aison, and obtain first-order conditions.(3 points) 3. Are the second order conditions satisfied? (3 points) 4. Sove for the utiity-maximizing. How does the optima empoyment of workers in the vineyard vary as the wage w of workers increases? And when the price p increases? Discuss the economic intuition. (3 points) 5. Using the enveope theorem, compute the effect on the utiity of Aison at the optimum u [p ( ) α w ] of an increase in price p. Does the finding make sense? Discuss. (4 points) 6. In a nearby terrain, Wei runs his operation with a standard profit-maximization. He has the same production function and costs as Aison, and hence maximizes max p α w. () Sovefortheprofit-maximizing for Wei. (3 points) 7. Aison and Wei are neighbors to a chatty economist trained in Stanford. (a concession to Prasad) The economist, after drinking a itte too much of their wine, is on-the-record on the oca TV as saying it is a pity that Aison is so risk-averse. Unike Aison, Wei just maximizes profits, which is much better for the company. Discuss this assertion in ight of what you found so far. Provide economic and mathematica intuition. (6 points) 8. The word of wine-growing is a treacherous one, with much uncertainty. In particuar, the price of wine fuctuates from year-to-year, and the decisions on how much to produce and how many workers to hire have to be made before the eve of price is known. The price p of a botte is 10 with probabiity q and 5 with probabiity 1 q. Let s consider first the probem of Wei, (). Wei now maximizes expected profits. Set up the maximization of expected profits by Wei, expaining why you are setting up the probem the way you are. (6 points) 9. Derive Wei s first order conditions and sove for the profit-maximizing eve of abor hired by Wei. (5 points) 10. How does the quantity of abor hired vary as the probabiity of a high price of wine q increases? Provide economic intuition (3 points) 11. Suppose that instead of facing uncertainty over the price of wine, Wei knew that the price of wine was going to be for sure q10 + (1 q)5, which is the expected vaue of the uncertain price. Using the soution you obtained in point 6, compute the quantity of abor hired by Wei in this case, and compare it to the quantity hired when the price is uncertain. How do the two quantities compare? (I mean, the one in point 9 and the one you just derived) Discuss the reason for this resut. (5 points) 1
2 1. Let us now go back to Aison s probem (1). Aison now faces uncertainty over the price of wine as we. As in Wei s case, the price p of a botte is 10 with probabiity q and 5 with probabiity 1 q. Aison now maximizes expected utiity. Set up the maximization of expected utiity by Aison. Derive the first-order conditions. (6 points) 13. Soving this probem formay is tricky. Using your economic intuition, discuss whether you expect that the quantity of abor hired by Aison in this case with uncertainty wi be the same, smaer, or arger than the quantity hired by Wei (that is, what you derived in point 10. Compared to the discussion in point 7, can the utiity function u matter here? (6 points) 14. (Hard) Can you prove formay whether the quantity of abor hired by Aison in this case with uncertainty wi be the same, smaer, or arger than the quantity hired by Wei? (Hint: use the property that u 0 (y) <u 0 (x) for y>xif u is concave) (8 points) Soution to Probem The concepts of returns to scae captures the response of production to an increase of a the inputs (here, just abor). Formay, a production function with ony one input, L, dispays decreasing returns to scae if f (tl) >tf(l) for a L and t>1, constant returns to scae if f (tl) =tf (L) for a L and t>1, increasing returns to scae if f (tl) <tf(l) for a L and t>1. In this case, f (tl) =(tl) α = t α L α = t α f (L). Since t α <tiff α<1, the function dispay decreasing returns to scae iff α<1.. The maximization of profits of Aison eads to the condition ³ u 0 [p ( ) α w ] pα ( ) α 1 w =0. 3. The second order conditions are ³ u 00 [p ( ) α w ] pα ( ) α 1 w + u 0 [p ( ) α w ] ³pα α (α 1) ( ) which are negative since u 00 (x) < 0 for a x and α<1 by assumption. Hence, the s.o.c. is satisfied. 4. Since u 0 (p α w) is aways positive, the f.o.c. above impies or pα ( ) α 1 w =0 = µ 1/(1 α) w αp As wage increases, the empoyment of workers decreases, since abor has become more costy. As the price increases, the empoyment of workers increases, since it has become more profitabe to produce more. 5. Using the enveope theorem, we know that du [p ( ) α w ] dp = u[p ( ) α w ] p = u 0 [p ( ) α w ] ( ) α > 0. An increase in price p increases the profits and hence the utiity of Aison in equiibrium.
3 6. Wei maximizes.thef.o.c.is eading to the same soution as for Aison. max p α w. pα ( ) α 1 w =0, = µ 1/(1 α) w, αp 7. The tipsy economist is not right in this case (though he be coser to right for the case beow). The fact that Aison is risk-averse does not affect in any way the maximization. One way to think of it is that the function u (x) introduces simpy a monotonic transformation of the profit function, and monotonic transformations of a function do not affect the optima soution. (Can you prove this?) This is very simiar to what we saw for the case of utiity maximization: a monotonic transformation of the same utiity function represents the same preferences, and hence wi ead to the same utiity-maximizing soution. This wi no more be true once we introduce uncertainty. 8. Now that there is uncertainty about the price of wine, Wei maximizes max q [10 α w]+(1 q)[5 α w]. Expected utiity tes that that we maximize the sum of the utiities in each state of the word (high price/ow price), weighted by the probabiities of each state. 9. The first-order condition is q 10α α 1 w +(1 q) 5α α 1 w =0 (3) or or [q10 + (1 q)5]α α 1 w =0 µ w = α (q10 + (1 q)5) 1/(1 α) 10. As the probabiity that the price of wine is high increases, the quantity of abor empoyed increases. The higher the expected price at which Wei can se the wine, the more Wei boosts the production. A higher (expected) price justifies hiring more workers and sending them to grow the margina parts (higher margina cost) of the vineyard that Wei woud not use otherwise. 11. Now that there is no more uncertainty about the price of wine, we are back to the case above, and we can use the soution µ 1/(1 α) w = αp to derive µ 1/(1 α) w =, α (q10 + (1 q)5) which is the same soution as in point 9. Wei just maximizes expected profits, he does not care whether the price is certain or uncertain, as ong as the expected vaue of the price is the same. 1. Aison s probem is max qu [10 α w]+(1 q) u [5 α w]. This is because Aison maximizes expected utiity. The first-order condition is qu 0 (10 α w) 10α α 1 w +(1 q) u 0 (5 α w) 5α α 1 w =0. 3
4 13. Aison maximizes the utiity of profits, and the utiity is concave. this means that Aison cares more at the margin about ow profits than she cares about high profits. When setting the optima price, Aison does not know whether prices wi be high or ow. If prices are high, she can make a itte extra profits by increasing the quantity produced, but this wi reduce the profits obtained if the price turns out to be ow. Conversey, is prices are ow, she can make extra profit by reducing the quantity produced, but this wi reduce the profits earned it the price is high. By the concavity of the utiity function, Aison cares more about decisions when profits are ow (and hence utiity is ow) than when profits are high (and utiity is high). Hence, she cares more about the case in which prices are ow, and she reduces the quantity produced, reative to what Wei produces. 14. Compute the derivative of the expected utiity function with respect to the amount invested s: qu 0 (10 α w) 10α α 1 w +(1 q) u 0 (5 α w) 5α α 1 w. (4) This expression, when set equa to zero, generates the first order condition. The trick is to prove that ³ this expression is negative for the vaue of W = w α(q10+(1 q)5) 1/(1 α) that maximizes the expected utiity of Wei. This impies that Aison, unike Wei, can improve utiity by producing ess than W. Together with the concavity of the utiity function of Wei, this impies that the optimum for Aison A is ower than for Wei, that is, A < W. To prove this, note that expression (4) has the same sign as expression (we divided by u 0 (10 α w)+u 0 (5 α w)) Bq 10α α 1 w +(1 B)(1 q) 5α α 1 w, (5) with u 0 (10 α w) B = u 0 (10 α w)+u 0 (5 α w). Expression (5) is the weighted sum of q 10α α 1 w and of (1 q) 5α α 1 w. Evauate now expression (5) at = W which, by definition, satisfies Wei s first order condition (3). If we had B =1/, we woud go back to Wei s first order condition (3), and the expression woud be zero. By the risk-aversion property, however, B<1/, since u 0 (10 α w) <u 0 (5 α w). Since 10α α 1 w> 5α α 1 w, it foows that, for = W, expression (5) is smaer than 0 since it is a convex combination that gives ess weight to the term 10 α w and more weight to 5α α 1 w, compared to expression (3) which is zero. We are done this was a hard proof to do. 4
5 Probem. Investment in Risky Asset (30 points) Consider a standard probem of investment in risky assets, simiar to the one that we covered in cass. The agent can invest in bonds or stocks. Bonds have a return r =0. (that is, they return back your capita at the end of the period) Stocks have a stochastic return,.10 (ten percent) with probabiity 1/, and.05 (minus 5 percent) with probabiity 1/. The agent has income w and utiity function u (x). The agents wants to decide the amount s of weath to invest in stocks; we assume 0 s w. The remaining of his weath, w s, is invested in bonds. (Note: s is not the share of weath, but the amount of weath) The agent s utiity function (defined over weath at the end of the period) is inear, u (x) =a + bx, with b>0. 1. At the beginning, before investing, the agent has weath w. What is the weath at the end, after investing, if the return of the stock is high? What is the weath if the return of the stock is ow?(4 points). Write down the expected utiity Eu of the agent, expaining how the expected utiity is defined. (4 points) 3. Derive the first order condition. (4 points) 4. Derive the second order condition. Is it satisfied? (3 points) 5. Find the soution for s. Argue the steps of the soution as precisey as you can. (Hint: Consider your answer to point 4) (10 points) 6. How does the soution for s change if bonds have a return r =.05 (5 percent)? (5 points) Soution to Probem. 1. The agent invests w s doars into a bond which provides gross return (w s) and s doars into a stock which provides return s (1 +.10) with probabiity 1/ and s (1.05) with probabiity 1 1/. Therefore, if stocks give high returns, the agent s weath at the end is (w s)+s (1.1) = w +.1s; if stocks give ow returns, the agent s weath at the end is (w s)+s (.95) = w.05s.. The expected utiity is the probabiity-weighted utiity under each state. Therefore, the expected utiity U is U = 1 (a + b (w +.1s)) + 1 (a + b (w.05s)). 3. The first order condition with respect to s is 1 0 b 1 40 b = 1 b =0 (6) The second order condition is 0 (not satisfied), which means that we shoud ook for corner soutions. 5. The derivative of the utiity function with respect to the investment s is 1 40b from (6). Since b> 0, 1 40b is aso positive, and hence the utiity is aways increase in the eve of s. The agent wants to increase the s as much as possibe, that is, up to s = w, which is the soution. 6. If r =.05, the utiity function becomes U = 1 (a + b ((w s)(1.05) + 1.1s)) + 1 (a + b ((w s)(1.05) +.95s)) = = 1 (a + b (1.05w +.05s)) + 1 (a + b (1.05w.10s)) = = a + b 1.05w + b.05 s b.10 = a + b 1.05w b 1 40 s. 5
6 Differentiating this with respect to s, we get b/40, which is negative. To the contrary of what we found before, here the agent aways wants to ower s, which wi ead to s =0as the soution. Intuitivey, now that the return to the riskess asset has increased, the expected return on the stock is now ower than the expected return to the bond, and a risk-neutra investor wi aways go for the asset with higher return. 6
Finance 462 Solutions to Problem Set #9. First, to simplify, set the unemployment rate to 5% (.05)
Finance 46 Soutions to Probem Set #9 1) With no fees, we have the foowing demand fooans: Q = 15 64 90. 4UR First, to simpify, set the unempoyment rate to 5% (.05) Q = 15 64 90.4(.05) = 10.48 64 To cacuate
More informationFinance Practice Midterm #2 Solutions. 1) Consider the following production function. Suppose that capital is fixed at 1.
Finance 00 Practice Midterm # Soutions ) Consider the foowing production function. Suppose that capita is fied at. Q K. L.05L For what vaues of Q is margina cost increasing? For what vaues of Q is margina
More informationThe Theory of the Firm Economic Markets
The Theory of the Firm Economic Markets We ve discussed demand, from the theory of a consumer. For suppy we wi examine the firms perspective, what inputs shoud they use, what are their ong run cost functions,
More informationSearch and O shoring in the Presence of Animal Spirits
Search and O shoring in the Presence of Anima Spirits Devashish Mitra Priya Ranjan Syracuse University University of Caifornia - Irvine Abstract: In this paper, we introduce two sources of unempoyment
More informationFidelity Freedom Index 2005 Fund - Investor Class (FJIFX)
Aocation Fideity Freedom Index 2005 Fund - Investor Cass (FJIFX) Hypothetica Growth of $10,000 1,2 (10/2/2009-) n Fideity Freedom Index 2005 Fund - Investor Cass $15,353 n Target-Date 2000-2010 $16,178
More informationAdvanced Microeconomics(ECH 32306)
Advanced Microeconomics(ECH 6) Homeork --- Soutions Expected Utiity Teory On p Jee and Reny say tat AXIOM G4 (Monotonicity) impies a an Prove tis We prove tis by contradiction Suppose a an, ten a a n and
More informationFidelity Freedom Index Income Fund - Institutional Premium Class (FFGZX)
Fideity Freedom Index Income Fund - Institutiona Premium Cass (FFGZX) NTF No Transaction Fee 1 Hypothetica Growth of $10,000 2,3 (10/2/2009-) n Fideity Freedom Index Income Fund - Institutiona Premium
More informationOnline Appendix to Product and Pricing Decisions in Crowdfunding
1 Onine Appendix to Product and Pricing Decisions in Crowdfunding A. Simutaneous versus Sequentia Modes Sequentia mecanism assumes tat two buyers arrive at te proposed project at different periods and
More informationEcon 101A Midterm 2 Th 6 November 2003.
Econ 0A Midterm 2 Th 6 November 2003. You have approximately hour and 20 minutes to answer the questions in the midterm. I will collect the exams at 2.30 sharp. Show your wk, and good luck! Problem. Production.
More informationPolitical Economy of Crop Insurance Risk Subsidies under Imperfect Information. June 7, Harun Bulut and Keith J. Collins *
Poitica Economy of Crop Insurance Risk Subsidies under Imperfect Information June 7, 213 Harun Buut and Keith J. Coins Seected Paper prepared for presentation at the Agricutura & Appied Economics Association
More informationMarket Size, Trade, and Productivity Melitz and Ottaviano. Felix Bausch
Market Size, Trade, and Produtivity Meitz and Ottaviano Feix Baush 06.07.2012 Overview 1. Genera features of the mode 2. The osed eonomy 3. The open eonomy two ountries 4. Trade iberaization shemes 5.
More informationAbstract (X (1) i k. The reverse bound holds if in addition, the following symmetry condition holds almost surely
Decouping Inequaities for the Tai Probabiities of Mutivariate U-statistics by Victor H. de a Peña 1 and S. J. Montgomery-Smith 2 Coumbia University and University of Missouri, Coumbia Abstract In this
More informationLegal vs Ownership Unbundling in Network Industries
Lega vs Ownership Unbunding in Network Industries Hemuth Cremer, Jacques Crémer, Phiippe De Donder University of Tououse (IDEI and GREMAQ) 1 Aée de Brienne 31000 Tououse Juy 3, 006 Abstract This paper
More informationEcon 101A Final Exam We May 9, 2012.
Econ 101A Final Exam We May 9, 2012. You have 3 hours to answer the questions in the final exam. We will collect the exams at 2.30 sharp. Show your work, and good luck! Problem 1. Utility Maximization.
More informationProduct Pricing, Lead Time and Capacity Selection in Price and Time Sensitive Markets
Product Pricing, Lead Time and Capacity Seection in Price and Time Sensitive Markets SACHIN JAYASWAL Department of Management Sciences University of Wateroo, Canada joint work wit Eizabet Jewkes¹ and Saiba
More informationThe University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access to Journal of Political Economy.
When Is the Government Spending Mutipier Large? Author(s): Lawrence Christiano, Martin Eichenbaum, Sergio Rebeo Source: Journa of Poitica Economy, Vo. 119, No. 1 (February 2011), pp. 78-121 Pubished by:
More informationA guide to your with-profits investment and how we manage our With-Profit Fund
Important information A guide to your with-profits investment and how we manage our With-Profit Fund For customers investing through a With Profits Pension Annuity. Contents This guide is important as
More informationPreparing Cash Budgets
Preparing Cash Budgets John Ogivie, author of the CIMA Study System Finance, gives some usefu tips on this popuar examination topic. The management of cash resources hods a centra position in the area
More informationYour guide to remortgaging
Mortgages Need more information? Speak to one of our mortgage advisers who wi be happy to expain more about our range of mortgages. Ca: 0345 734 4345 (Monday to Friday 8am to 6pm) Cas may be monitored
More informationCIBC Managed Income Portfolio. Annual Management Report of Fund Performance
CIBC Managed Income Portfoio Annua Management Report of Fund Performance for the financia year ended December 31, 2015 A figures are reported in Canadian doars uness otherwise noted This annua management
More informationCompeting for Consumer Inattention
Competing for Consumer Inattention Geoffroy de Cippe Kfir Eiaz Kareen Rozen February 2014 Abstract Consumers purchase mutipe types of goods, but may be abe to examine ony a imited number of markets for
More informationOECD ECONOMIC SURVEY OF DENMARK 2005 IS THE WELFARE SYSTEM SUSTAINABLE?
ORGANISATION DE COOPÉRATION ET DE DÉVELOPPEMENT ÉCONOMIQUES ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT OECD ECONOMIC SURVEY OF DENMARK 25 IS THE WELFARE SYSTEM SUSTAINABLE? This is an excerpt
More informationECON 6022B Problem Set 2 Suggested Solutions Fall 2011
ECON 60B Problem Set Suggested Solutions Fall 0 September 7, 0 Optimal Consumption with A Linear Utility Function (Optional) Similar to the example in Lecture 3, the household lives for two periods and
More informationeconstor Make Your Publication Visible
econstor Make Your Pubication Visibe A Service of Wirtschaft Centre zbwleibniz-informationszentrum Economics Hoyt, Wiiam H. Working Paper The Assignment and Division of the Tax Base in a System of Hierarchica
More informationDepartment of Economics. Issn Discussion paper 19/08
Department of Economics Issn 1441-5429 Discussion paper 19/08 INFORMATION GATHERING, DELEGATED CONTRACTING AND CORPORATE HIERARCHIES Chongwoo Choe and In-Uck Park 2008 Chongwoo Choe and In-Uck Park A rights
More informationBank Stability and Market Discipline: Debt-for- Equity Swap versus Subordinated Notes
ank Stabiity and Market Discipine: Debt-for- Equity Swap versus Subordinated Notes Aon Raviv Abstract Severa studies have recommended reiance on subordinated debt as a too for monitoring banks by investors
More informationFinancing the Entrepreneurial Venture
Financing the Entrepreneuria Venture Jean-Etienne de Bettignies y First Draft: September 2, 2002 This Draft: October 7, 2003 Abstract This paper is about nancia contracting choices for the entrepreneur.
More informationVariance Reduction Through Multilevel Monte Carlo Path Calculations
Variance Reduction Through Mutieve Monte Caro Path Cacuations Mike Gies gies@comab.ox.ac.uk Oxford University Computing Laboratory Mutieve Monte Caro p. 1/30 Mutigrid A powerfu technique for soving PDE
More informationFinancing the Entrepreneurial Venture
Financing the Entrepreneuria Venture Jean-Etienne de Bettignies y This Draft: November, 2005 Abstract This paper is about nancia contracting choices for the entrepreneur. In an incompete contracts mode,
More informationCharacterization of the Optimum
ECO 317 Economics of Uncertainty Fall Term 2009 Notes for lectures 5. Portfolio Allocation with One Riskless, One Risky Asset Characterization of the Optimum Consider a risk-averse, expected-utility-maximizing
More informationDo Not Write Below Question Maximum Possible Points Score Total Points = 100
University of Toronto Department of Economics ECO 204 Summer 2012 Ajaz Hussain TEST 2 SOLUTIONS TIME: 1 HOUR AND 50 MINUTES YOU CANNOT LEAVE THE EXAM ROOM DURING THE LAST 10 MINUTES OF THE TEST. PLEASE
More informationEcon 101A Midterm 2 Th 6 November 2003.
Econ 101A Midterm 2 Th 6 November 2003. You have approximately 1 hour and 20 minutes to anser the questions in the midterm. I ill collect the exams at 12.30 sharp. Sho your k, and good luck! Problem 1.
More informationOffshoring and Skill-upgrading in French Manufacturing: A Heckscher-Ohlin-Melitz View
Offshoring and Ski-upgrading in French Manufacturing: A Heckscher-Ohin-Meitz View Juan Caruccio Aejandro Cuñat Harad Fadinger Christian Fons-Rosen March 015 Abstract We present a factor proportion trade
More informationWilliam Neilson Texas AMUniversity. Abstract
Caibration resuts for rank dependent expected utiity Wiiam Neison Texas AMUniversity Abstract If its utiity function is everywhere increasing and concave, rank dependent expected utiity shares a troubing
More informationA guide to your with-profits investment and how we manage our With-Profit Fund
Important information A guide to your with-profits investment and how we manage our With-Profit Fund For customers investing through an Aviva investment bond. Contents This guide is important as it aims
More informationRatio Analysis 107. Part II Management & Cost Accounting
Ratio Anaysis 107 Part II Management & Cost Accounting Ratio Anaysis 109 Chapter 4 Ratio Anaysis LEARNING OBJECTIVES In this chapter we wi study: Introduction Concept of Ratio Types of Ratios Measurement
More informationEcon 101A Midterm 1 Th 28 February 2008.
Econ 0A Midterm Th 28 February 2008. You have approximately hour and 20 minutes to answer the questions in the midterm. Dan and Mariana will collect the exams at.00 sharp. Show your work, and good luck!
More informationLoans, Insurance and Failures in the Credit Market for Students
Loans, Insurance and Faiures in the Credit Market for Students Eena de Rey and Bertrand Verheyden y February 2008 Preiminary draft. Do not quote without permission. Abstract We present a mode with perfecty
More informationLoading Factors and Equilibria in Insurance Markets
Loading Factors and Equiibria in Insurance Markets Yoram Eden, * Eiakim Katz, ** and Jacob Rosenberg *** Abstract: Tis paper examines te effect of introducing positive oading factors into insurance premia,
More informationKey Features of the Tax-Free Flexible Plan
Key Features of the The Key Features suppied beow appy to the adut investment eement of the Famiy Fexibe Pan. No advice has been provided by Scottish Friendy in reation to this pan. If you are in any doubt
More informationEconomics 352: Intermediate Microeconomics
Economics 35: Intermediate Microeconomics Notes and Sampe Questions Chapter 8: Cost Functions This chapter inestigates the reationship beteen a production function and the cost of producing gien uantities
More informationA guide to your with-profits investment and how we manage our With-Profit Fund
Important information A guide to your with-profits investment and how we manage our With-Profit Fund For customers investing through pension pans. Contents This guide is important as it aims to answer
More informationELECTRONIC FUND TRANSFERS YOUR RIGHTS AND RESPONSIBILITIES. l l l. l l. l l l
ELECTRONIC FUND TRANSFERS YOUR RIGHTS AND RESPONSIBILITIES The Eectronic Fund Transfers we are capabe of handing for consumers are indicated beow, some of which may not appy your account Some of these
More informationFinancial (Des)Integration.
Financia (Des)Integration. Enisse Kharroubi June 2005 Abstract This paper addresses the macroeconomic impact of internationa nancia integration. I rst provide empirica evidence that foreign banking penetration
More informationCIBC Global Bond Index Fund. Annual Management Report of Fund Performance
CIBC Goba Bond Inde Fund Annua Management Report of Fund Performance for the financia year ended December 31, 2015 A figures are reported in Canadian doars uness otherwise noted This annua management report
More informationAntithetic multilevel Monte Carlo estimation for multidimensional SDES
Antithetic mutieve Monte Caro estimation for mutidimensiona SDES Michae B. Gies and Lukasz Szpruch Abstract In this paper we deveop antithetic mutieve Monte Caro MLMC estimators for mutidimensiona SDEs
More informationInformal unemployment and education
Kom and Larsen ZA Journa of Labor Economics 06 5:8 DO 0.86/s407-06-0048-6 ZA Journa of Labor Economics ORGNAL ARTCLE Open Access nforma unempoyment and education Ann-Sofie Kom and Birte Larsen * *Correspondence:
More informationCourse Handouts - Introduction ECON 8704 FINANCIAL ECONOMICS. Jan Werner. University of Minnesota
Course Handouts - Introduction ECON 8704 FINANCIAL ECONOMICS Jan Werner University of Minnesota SPRING 2019 1 I.1 Equilibrium Prices in Security Markets Assume throughout this section that utility functions
More informationThe Valuation of Long-Term Securities
4 The Vauation of Long-Term Securities Contents Distinctions Among Vauation Concepts Liquidation Vaue versus Going-Concern Vaue Book Vaue versus Market Vaue Market Vaue versus Intrinsic Vaue Bond Vauation
More informationBarriers and Optimal Investment 1
Barriers and Optima Investment 1 Jean-Danie Saphores 2 bstract This paper anayzes the impact of different types of barriers on the decision to invest using a simpe framework based on stochastic discount
More informationExpected Utility And Risk Aversion
Expected Utility And Risk Aversion Econ 2100 Fall 2017 Lecture 12, October 4 Outline 1 Risk Aversion 2 Certainty Equivalent 3 Risk Premium 4 Relative Risk Aversion 5 Stochastic Dominance Notation From
More informationThe Normative Analysis of Tagging Revisited: Dealing with Stigmatization
The Normative Anaysis of Tagging Revisited: Deaing with Stigmatization Laurence Jacquet and Bruno Van der Linden February 20, 2006 Abstract Shoud income transfers be conditiona upon persona characteristics
More informationMULTILEVEL MONTE CARLO FOR BASKET OPTIONS. Michael B. Giles
Proceedings of the 29 Winter Simuation Conference M. D. Rossetti, R. R. Hi, B. Johansson, A. Dunkin, and R. G. Ingas, eds. MULTILEVEL MONTE CARLO FOR BASKET OPTIONS Michae B. Gies Oxford-Man Institute
More informationOptimal M&A Advisory Contracts
Optima M&A Advisory Contracts Rajkama Vasu Companion Paper to the Job Market Paper This Version: November 27, 207 Most Recent Version at www.keogg.northwestern.edu/facuty/vasu Abstract Consider a scenario
More informationMinimum Wage and Export with Heterogeneous Firms
Minimum Wage and Export with Heterogeneous Firms Churen Sun Shanghai Institute of Foreign Trade, Shanghai, 201600 Guoqiang Tian Texas A&M University, Coege Station, 77840 Tao Zhang Shanghai Institute of
More informationEcon 101A Final exam Mo 18 May, 2009.
Econ 101A Final exam Mo 18 May, 2009. Do not turn the page until instructed to. Do not forget to write Problems 1 and 2 in the first Blue Book and Problems 3 and 4 in the second Blue Book. 1 Econ 101A
More informationStepwise Investment and Capacity Sizing under Uncertainty
OR Spectrum manuscript No. (wi be inserted by the editor Stepwise Investment and Capacity Sizing under Uncertainty Michai Chronopouos Verena Hagspie Stein Erik Feten Received: date / Accepted: date Abstract
More informationProject selection and risk taking under credit constraints
Project seection and risk taking under credit constraints Feipe S. Iacan FGV/EPGE August 7, 203 Abstract We anayze project seection and financing under endogenous credit constraints from imited enforcement.
More informationDoes Africa Need a Rotten Kin Theorem?
Pubic Discosure Authorized Pubic Discosure Authorized Pubic Discosure Authorized Pubic Discosure Authorized Poicy Research Working Paper 6085 Impact Evauation Series No. 58 Does Africa Need a Rotten Kin
More informationCIBC Canadian Bond Fund. Annual Management Report of Fund Performance
CIBC Canadian Bond Fund Annua Management Report of Fund Performance for the financia year ended December 31, 2015 A figures are reported in Canadian doars uness otherwise noted This annua management report
More informationAnalyzing Scrip Systems
Submitted to manuscript Pease, provide the manuscript number! Anayzing Scrip Systems Kris Johnson Operations Research Center, Massachusetts Institute of Technoogy, krisd@mit.edu David Simchi-Levi Engineering
More informationELECTRONIC FUND TRANSFERS YOUR RIGHTS AND RESPONSIBILITIES. l l l
ELECTRONIC FUND TRANSFERS YOUR RIGHTS AND RESPONSIBILITIES The Eectronic Fund Transfers we are capabe of handing for consumers are indicated beow, some of which may not appy your account Some of these
More informationELECTRONIC FUND TRANSFERS YOUR RIGHTS AND RESPONSIBILITIES. l l
ELECTRONIC FUND TRANSFERS YOUR RIGHTS AND RESPONSIBILITIES The Eectronic Fund Transfers we are capabe of handing for consumers are indicated beow some of which may not appy your account Some of these may
More informationCompetition, ownership and bank performance in transition
Competition, ownership and bank performance in transition by Steven Fries,* Damien Neven** and Pau Seabright*** August 2004 Abstract This paper examines how competition among banks and their ownership
More informationA profile likelihood method for normal mixture with unequal variance
This is the author s fina, peer-reviewed manuscript as accepted for pubication. The pubisher-formatted version may be avaiabe through the pubisher s web site or your institution s ibrary. A profie ikeihood
More informationAnnual Notice of Changes for 2019
SiverScript Choice (PDP) offered by SiverScript Insurance Company Annua Notice of Changes for 2019 You are currenty enroed as a member of SiverScript Choice (PDP). Next year, there wi be some changes to
More informationMultilevel Monte Carlo Path Simulation
Mutieve Monte Caro Path Simuation Mike Gies gies@comab.ox.ac.uk Oxford University Computing Laboratory 15th Scottish Computationa Mathematics Symposium Mutieve Monte Caro p. 1/34 SDEs in Finance In computationa
More informationYou are responsible for upholding the University of Maryland Honor Code while taking this exam.
Econ 300 Spring 013 First Midterm Exam version W Answers This exam consists of 5 multiple choice questions. The maximum duration of the exam is 50 minutes. 1. In the spaces provided on the scantron, write
More informationOptimal Hedge Ratio for Brent Oil Market; Baysian Approach
Internationa Letters of Socia and Humanistic Sciences Onine: 2014-08-17 ISSN: 2300-2697, Vo. 37, pp 82-87 doi:10.18052/www.scipress.com/ilshs.37.82 2014 SciPress Ltd., Switzerand Optima Hedge Ratio for
More informationSpatial Asset Pricing: A First Step
Spatia Asset Pricing: A First Step François Ortao-Magné University of Wisconsin Madison Andrea Prat Coumbia University Revised May 1, 2013 Abstract Peope choose where to ive and how much to invest in housing
More informationUniversity of Toronto Department of Economics ECO 204 Summer 2013 Ajaz Hussain TEST 2 SOLUTIONS GOOD LUCK!
University of Toronto Department of Economics ECO 204 Summer 2013 Ajaz Hussain TEST 2 SOLUTIONS TIME: 1 HOUR AND 50 MINUTES DO NOT HAVE A CELL PHONE ON YOUR DESK OR ON YOUR PERSON. ONLY AID ALLOWED: A
More informationAnnual Notice of Changes for 2018
WeCare Advance (HMO-POS) offered by Harmony Heath Pan, Inc. Annua Notice of Changes for 2018 You are currenty enroed as a member of WeCare Advance (HMO). Next year, there wi be some changes to the pan
More informationImperial Canadian Bond Pool. Interim Management Report of Fund Performance
Imperia Canadian Bond Poo Interim Management Report of Fund Performance for the period ended June 30, 2016 A figures are reported in Canadian doars uness otherwise noted This interim management report
More informationPricing and Revenue Sharing Strategies for Internet Service Providers
Pricing and Revenue Sharing Strategies for Internet Service Providers Linhai He and Jean Warand Dept. of EECS, U.C. Berkeey {inhai,wr}@eecs.berkeey.edu 1 Abstract One of the chaenges facing the networking
More informationMulti-Dimensional Forward Contracts under Uncertainty for Electricity Markets
This artice has been accepted for pubication in a future issue of this journa, but has not been fuy edited. Content may change prior to fina pubication. Citation information: DOI 1.119/TCNS.216.2518924,
More informationMonotone, Convex and Extrema
Monotone Functions Function f is called monotonically increasing, if Chapter 8 Monotone, Convex and Extrema x x 2 f (x ) f (x 2 ) It is called strictly monotonically increasing, if f (x 2) f (x ) x < x
More informationAggregate Demand Externalities in a Global Liquidity Trap
Aggregate Demand Externaities in a Goba Liquidity rap Luca Fornaro and Federica Romei December 2016 PRELIMINARY AND INCOMPLEE, COMMENS WELCOME Abstract A recent iterature has suggested that macroprudentia
More informationDepartment of Economics ECO 204 Microeconomic Theory for Commerce (Ajaz) Test 2 Solutions
Department of Economics ECO 204 Microeconomic Theory for Commerce 2016-2017 (Ajaz) Test 2 Solutions YOU MAY USE A EITHER A PEN OR A PENCIL TO ANSWER QUESTIONS PLEASE ENTER THE FOLLOWING INFORMATION LAST
More informationOpen Learn Works. Small business responsibilities. Copyright 2015 The Open University
Open Learn Works Sma business responsibiities Copyright 2015 The Open University Contents Introduction 3 Learning Outcomes 4 1 A business owner s responsibiities 5 2 Financia terms 6 2.1 Vaue added tax
More informationLiquidity Effects of Listing Requirements
Liquidity Effects of Listing Requirements Sara Draus 1 May 009 Abstract I propose a mode in wic a stock excange can improve its iquidity by tigtening its isting requirements. Because tese reduce information
More informationUNIT-V
www.jntuword.com UNIT-V www.jntuword.com LESSON 20 COST OF CAPITAL CONTENTS 20.0 Aims and Objectives 20.1 Introduction 20.2 Meaning and Assumptions of Cost of Capita 20.3 Measurement of Cost of Debt 20.4
More informationSilverScript Employer PDP sponsored by Montgomery County Public Schools (SilverScript) Annual Notice of Changes for 2018
P.O. Box 52424, Phoenix, AZ 85072-2424 SiverScript Empoyer PDP sponsored by Montgomery County Pubic Schoos (SiverScript) Annua Notice of Changes for 2018 You are currenty enroed as a member of SiverScript.
More informationS CORPORATIONS INTRODUCTION AND STUDY OBJECTIVES. In studying the rules of S corporations, the student should have these objectives: STUDY HIGHLIGHTS
H Chapter Eeven H S CORPORATIONS INTRODUCTION AND STUDY OBJECTIVES Certain sma business corporations may eect to be taxed under Subchapter S instead of under the reguar rues for taxation of corporations.
More informationCIBC Managed Aggressive Growth Portfolio. Annual Management Report of Fund Performance
CIBC Managed Aggressive Growth Portfoio Annua Management Report of Fund Performance for the financia year ended December 31, 2015 A figures are reported in Canadian doars uness otherwise noted This annua
More informationAnnual Notice of Changes for 2017
WeCare Extra (PDP) offered by WeCare Prescription Insurance, Inc. Annua Notice of Changes for 2017 You are currenty enroed as a member of WeCare Extra (PDP). Next year, there wi be some changes to the
More informationFinancial Economics: Risk Aversion and Investment Decisions
Financial Economics: Risk Aversion and Investment Decisions Shuoxun Hellen Zhang WISE & SOE XIAMEN UNIVERSITY March, 2015 1 / 50 Outline Risk Aversion and Portfolio Allocation Portfolios, Risk Aversion,
More informationPh.D. Preliminary Examination MICROECONOMIC THEORY Applied Economics Graduate Program June 2017
Ph.D. Preliminary Examination MICROECONOMIC THEORY Applied Economics Graduate Program June 2017 The time limit for this exam is four hours. The exam has four sections. Each section includes two questions.
More informationPrice Dynamics in Market with Heterogeneous Investment Horizons and Boundedly Rational Traders
Price Dynamics in Market with Heterogeneous Investment Horizons and Boundedy Rationa Traders Thierry Chauveau, Aexander Subbotin To cite this version: Thierry Chauveau, Aexander Subbotin. Price Dynamics
More informationMaster in Industrial Organization and Markets. Spring 2012 Microeconomics III Assignment 1: Uncertainty
Master in Industrial Organization and Markets. Spring Microeconomics III Assignment : Uncertainty Problem Determine which of the following assertions hold or not. Justify your answers with either an example
More informationThe Paradox of Global Thrift
he Paradox of Goba hrift Luca Fornaro and Federica Romei his draft: November 2017 First draft: December 2016 PRELIMINARY AND INCOMPLEE, COMMENS WELCOME Abstract his paper describes a paradox of goba thrift.
More informationCOMPARING ALTERNATIVE REIMBURSEMENT METHODS IN A MODEL OF PUBLIC HEALTH INSURANCE
XIV CONFERENZA IL FUTURO DEI SISTEMI DI WELFARE NAZIONALI TRA INTEGRAZIONE EUROPEA E DECENTRAMENTO REGIONALE coordinamento, competizione, mobiità Pavia, Università, 4-5 ottobre 2002 COMPARING ALTERNATIVE
More informationCorporate fraud and investment distortions in efficient capital markets
AND Journa of Economics Vo. 4, No. 1, Spring 29 pp. 144 172 Corporate fraud and investment distortions in efficient capita markets Praveen Kumar and Nisan Langberg Inefficient investment aocation induced
More informationAnswer Key to Midterm Exam. February
ECON 525 Farnham/Gugl Answer Key to Midterm Exam February 21 2014 1) Public goods. Suppose there are two identical people in the economy. They privately contribute to a public good. Consumers have the
More informationMANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING FORMATION 2 EXAMINATION - AUGUST 2017 NOTES: Section A - Questions 1 and 2 are compusory. You have to answer Part A or Part B ony of Question 2. Shoud you provide answers to both
More informationWB mm. iitfiiiiii. MiA^ MIT LIBRARIES
MIT LIBRARIES WB mm 3 9080 02246 0585 MiA^ iitfiiiiii Digitized by the Internet Archive in 2011 with funding from Boston Library Consortium Member Libraries http://www.archive.org/detais/bargainingoverriooyid
More informationChapter 6: Risky Securities and Utility Theory
Chapter 6: Risky Securities and Utility Theory Topics 1. Principle of Expected Return 2. St. Petersburg Paradox 3. Utility Theory 4. Principle of Expected Utility 5. The Certainty Equivalent 6. Utility
More informationOn Multilevel Quasi-Monte Carlo Methods
On Mutieve Quasi-Monte Caro Methods Candidate Number 869133 University of Oxford A thesis submitted in partia fufiment of the MSc in Mathematica and Computationa Finance Trinity 2015 Acknowedgements I
More informationThe Role of Technological Complexity and Absorptive Capacity in Internalization Decision
CDE May 2007 The Roe of Technoogica Compexity and Absorptive Capacity in Internaiation Decision Arti Grover Emai: arti@econdse.org Dehi choo of Economics University of Dehi Working Paper o. 53 Centre for
More information2016 PRIMARY & SECONDARY EDUCATION BUDGET BRIEF
ZIMBABWE 216 PRIMARY & SECONDARY EDUCATION BUDGET BRIEF Key Messages Primary and Secondary Education was aocated US$81.43 miion about 2.3% of tota budget, but 9.5% ower than 215 aocation; The 216 aocation
More informationLevels of diversification
Muti-Asset (MA) Bended Funds Leves of diversification Past performance is not a guide to future performance. 2. Leves of diversification What are eves of diversification? At Architas we beieve that diversification
More information