I need clarification on what a "numerical solution" should be in the context of my economic question. Is it simply a number or numerical value, or is it a formula? I'm not looking for the answer to this problem. I am just making sure i understand the question. See attached.
I need clarification on what a "numerical solution" should be in the context of my economic question. Is it simply a number or numerical value, or is it a formula? I'm not looking for the answer to this problem. I am just making sure i understand the question. See attached.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I need clarification on what a "numerical solution" should be in the context of my economic question. Is it simply a number or numerical value, or is it a formula?
I'm not looking for the answer to this problem. I am just making sure i understand the question.
See attached.
Transcribed Image Text:b. At the beginning of period t+5, a completely unexpected "government coup" occurs abroad, and
the new government announces that the dividend restriction on international stock will 1last
forever. More precisely, the restricted dividend payment schedule announced in the beginning of
period t+5 is
Ds = Dn = D = D = D = D10
=.... = Do = D'
t+42
Dn42 = Dn43
t+6
=... = 0.
t+5
t+7
t+8
t+9
t+10
Supposing that this announcement by the new government is believed by everybody, provide
ONE equation for the period t+5 nominal price of international stock and ONE equation for
the period t+5 nominal price of domestic stock, which should be written as
=...
t+5
=..
t+5
in which the pair of right-hand sides are for you to determine.
(Note 1: As in part a, it is left to you to determine the most relevant steps of logic and/or
mathematics and/or graphical analysis that support(s) the conclusion. The conclusion, even if
correct, will be awarded ZERO points if there is no or very little support behind it or if the
logic/explanation is not sufficiently clear.)
(Note 2: The solution for Ss is a precise numerical solution; if your solution for Ss is not a
t+5
t+5
precise numerical solution, you may be awarded ZERO points.)
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