Principles Of Macroeconomics V 8.0
18th Edition
ISBN: 9781453378717
Author: Taylor
Publisher: BOSTON ACADEMIC (DBA FLAT WORLD)
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Textbook Question
Chapter 14, Problem 17RQ
What is the asset-liability time mismatch that all banks face?
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1. A firm has the following demand function: P = 60 – 0.5Q and its total cost is defined by TC= 13+ Qa. Find the maximum revenue b. Find the production to optimize the profit. c. Verify if the marginal revenue and marginal cost are the same at the profit-maximizing productionlevel. Exercise 6From the point of view of the firm, what decision criteria have been found relevant in the analysis ofproduction and profit? Provide two refernces with your answer.
5. Some people find options expensive and use more complex structures to reduce the cost. For
example, consider buying a call with a strike of $55 and selling a call with a strike of $60.
a. What is the cost of establishing this combined position?
b. What is the payoff of the combined position if the market price goes to $60?
c. What is the payoff of the combined position if the market price goes to $100?
3. An investor has $1,000 to invest. They believe the price of the underlier will increase to $60
within one year.
a. How many shares of stock could they buy with the $1,000 at the current price of $50,
and how much would they make if the share price increased to $60?
b. How many calls with a strike of $55 could they buy for the same $1,000, and how
much would they make if the share price increased to $60?
c. How much would they make (or lose) from the stock and from the calls if the share
price declined to $40?
4. What is the premium on a call with a strike of $0.01? Why is the premium so close to the $50
share price?
Chapter 14 Solutions
Principles Of Macroeconomics V 8.0
Ch. 14 - In many casinos, a person buys chips to use for...Ch. 14 - Can you name some item that is a store of value,...Ch. 14 - If you are out shopping for clothes and books,...Ch. 14 - For the following list of items, indicate If they...Ch. 14 - Explain why the money listed under assets on a...Ch. 14 - Imagine that you are in the position of buying...Ch. 14 - What are the four functions that money serves?Ch. 14 - How does the existence of money simplify the...Ch. 14 - What is the double-coincidence of wants?Ch. 14 - What components of money do we count as part of...
Ch. 14 - What components of money do we count in M2?Ch. 14 - Why do we call a bank a financial intermediary?Ch. 14 - What does a balance sheet show?Ch. 14 - What are a banks assets? What are its liabilities?Ch. 14 - How do you calculate a banks net worth?Ch. 14 - How can a bank end up with negative net worth?Ch. 14 - What is the asset-liability time mismatch that all...Ch. 14 - What is the risk if a bank does not diversify its...Ch. 14 - How do banks create money?Ch. 14 - What is the formula for the money multiplier?Ch. 14 - The Bring it Home Feature discusses the use of...Ch. 14 - Imagine that you are a barber in a world without...Ch. 14 - Explain why think the Federal Reserve Bank tracks...Ch. 14 - The total amount of U.S. currency in circulation...Ch. 14 - Explain the difference between how you would...Ch. 14 - Should banks have to hold 100 of their deposits?...Ch. 14 - Explain what will happen to the money multiplier...Ch. 14 - What do you think the Federal Reserve Bank did to...Ch. 14 - If you take 100 out of your piggy bank and deposit...Ch. 14 - A bank has deposits of 400. It holds reserves of...Ch. 14 - Humongous Bank is the only bank in the economy....
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