A standard "money demand" function used by macroeconomists has the formIn(m) = o +/In(GDP) +₂RWhere m is the quantity of (real) money, GDP is the value of (real) gross domestic product, and R is the value of the nominal interest rate measured in percent peryear. Supposed that ₁ = 3.83 and ₂ = -0.05.What is the expected change in mif GDP increases by 10%?The value of m is expected toby approximately%(Round your response to the nearest integer)What is the expected change in m if the interest rate increases from 3% to 7%?The value of m is expected to(Round your responby approximately%ger)increasedecrease

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A standard "money demand function used by macroeconomists has the form In(m)o +In(GDP) +R Where m is the quantity of (real) money, GDP is the value of (real) gross domestic product, and R is the value of the nominal interest rate measured in percent per year. Supposed that /₁ = 3.83 and 2 = -0.05. What is the expected change in mif GDP increases by 10%? The value of m is expected to by approximately% (Round your response to the nearest integer) What is the expected change in m if the interest rate increases from 3% to 7%? The value of m is expected to (Round your respon by approximately% ger) increase decrease

A standard "money demand function used by macroeconomists has the form In(m)o +In(GDP) +R Where m is the quantity of (real) money, GDP is the value of (real) gross domestic product, and R is the value of the nominal interest rate measured in percent per year. Supposed that /₁ = 3.83 and 2 = -0.05. What is the expected change in mif GDP increases by 10%? The value of m is expected to by approximately% (Round your response to the nearest integer) What is the expected change in m if the interest rate increases from 3% to 7%? The value of m is expected to (Round your respon by approximately% ger) increase decrease

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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If the required reserve ratio is 15%, currency in circulation is $400 Billion, checkable deposists are $8000 billion, and excess reserves total is $0.8 billion. first) calculate the M1 money multiplier second) if the monetatyr base now increases by $275 billion, how much would money supply increase by?
A firm expects to make payments of 1.1, 1.5, 1.2, 1.4 and 1.9 million for a particular supply over each of the next 5 years. What constant annual payment is this equivalent to if the annual rate is 10%? That is, what is the time-value weighted average of this mixed-cash flow stream?
Scenarios: You work in the macroeconomic research department of an investment bank. Based on your modelling of the economy, you think that in the next few months US GDP will evolve according to three basic scenarios: Scenario A: GDP will rise 3%. This will send the S&P ETF to 414. Scenario B: GDP will stagnate. S&P ETF will stay at 407. Scenario C: GDP will fall 2%. This will send the S&P ETF to 400. Question 1: Compute the payoff and net payoff of a bear spread strategy built with put options in the three scenarios above. The put options should have strikes 405 and 409 and mature in February. Draw the profile of the bear spread strategy. Use the data in Table 2. Please show your calculations. Discuss your result.
Scenarios: You work in the macroeconomic research department of an investment bank. Based on your modelling of the economy, you think that in the next few months US GDP will evolve according to three basic scenarios: Scenario A: GDP will rise 3%. This will send the S&P ETF to 414. Scenario B: GDP will stagnate. S&P ETF will stay at 407. Scenario C: GDP will fall 2%. This will send the S&P ETF to 400. Question 3 You build an “Iron Condor” strategy with February maturity combining the following positions: a long put at 405 a short put at 406 a short call at 408 a long call at 409 Draw the payoff and net payoff of the Iron Condor strategy. Compute the payoff and net payoff of this strategy in the three scenarios. Use the data in Table 2. Please show your calculations. Discuss your result.
According to the quantity theory of money, if the longminusrun economic growth rate is 3.6%, by how much should the Fed increase the money supply if it wants inflation to be 3%?
Most economies have a goal of maximizing the average consumption per period. Assume that during each year, an economy saves the same (to be determined) percentage S of its production. During a year in which the beginning capital level is K, a quantity K1y2 of capital is produced. If the economy saves a percentage S of its capital, then during the current year it consumes (1 2 S)K units of capital and, through savings, adds (SK) 1y2 units of capital. Also, during any year, 10% of all capital present at the beginning of the year depreciates or wears out. a. What annual savings percentage S maximizes the long-run average consumption level? Assume that year 50 represents the long run, so that the objective is the consumption level in year 50. You can assume the initial capital is 1 (for some appropriate measurement unit). b. Use SolverTable to see how the optimal value of S depends on the annual depreciation rate.
What's the FUTURE value of the following cash flows, at 6%/period: 0,200,400,600,800,1000 (Oh man! There's no FIG table...what to do?) Type your answer...
You have the following cash flows for the firm; What is NPV, if discount rate is 10% ? CF0 = -477 (CF0 is always negative. It is your initial investment) CF1 = 710 CF2 = 699 CF3 = 752 CF4 = 734 CF5 = 937
You have the following cash flows for the firm; What is NPV, if discount rate is 10% ? CF0 = -433 (CF0 is always negative. It is your initial investment) CF1 = 969 CF2 = 697 CF3 = 824 CF4 = 727 CF5 = 922
Assuming a 1-year, money market account investment at 2.282.28 percent (APY), a 1.391.39 percent inflation rate, a 2525 percent marginal tax bracket, and a constant $50 comma 00050,000 balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions?
What is TRUE about the Future Value general growth:I. For a given interest rate: the longer the time period, the higher the future valueII. For a given time period: the higher the interest rate, the larger the future valueIII. The formula for Future Value is FV = r(1 + PV)tIV. The formula for Future Value is FV = PV(1 + r)tV. The formula for Future Value is FV = PV(1 + t)r
Explain in a few sentences what each example means. This is strictly qualitative.

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