Search & Filtering
A stockbroker gathers the following data. Stock FB splits two-for-one during the
period.
Beginning of Period End of period
Stock Price ($) Shares Price ($) Shares
TA 31 6,000 29 6,000
FB 92 300 54 600
ZM 42 2,200 43 2,200
a. Calculate the returns on both the price-weighted index and the market value-
weighted index of three stocks over the period.
b. Explain the difference in returns between the two indexes.
The following table shows a partial listing of T-bills from the Wall Street Journal
Outline. Rather than providing prices of each bill, the financial press reports yields using the bank-discount method. The face value of T-bill is $10,000.
Treasury Bills
August 6, 2021
Maturity Bid (%) Asked (%)
9/2/2021 0.040 0.030
9/9/2021 0.045 0.035
9/16/2021 0.043 0.033
9/23/2021 0.048 0.038
Consider the bill maturing on September 23.
a. What is the price at which the dealer is willing to buy assuming days to
maturity are 48 days?
b. What is the bond equivalent yield if you purchase the bill?
Explain each of the following statements using supply-and-demand diagrams.
a) “When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout the country.”
b) “When the weather turns warm in New England every summer, the price of hotel rooms in Caribbean resorts plummets.”
c) “A strike by steelworkers raises steel prices.”
d) “The price of station wagons rises.”
You are bearish on TSM and decide to sell short 2,000 shares at the current market price of $68 per share. TSM pays no dividends.
a. How much in cash or securities must you put into your brokerage account if the initial margin requirement is 60%?
b. If you earn no interest on the funds in your margin account, what will be your rate of return after a week if TSM is selling at $56 per share? c. How high can the price of the stock go before you get a margin call if the maintenance margin is 40%?
You are bullish on RVH stock. The current market price is $50 per share, and you have $600,000 of your own to invest. You borrow an additional $400,000 from your broker at an interest rate of 3% per week and invest $1,000,000 in the stock. RVH pays no dividends.
a. Suppose the price of RVH stock falls immediately after your purchase. The maintenance margin is 30%. How low can the price of RVH stock fall before you receive a margin call?
b. Suppose a week has passed. What is your rate of return if the price of RVH stock has gone up by 20%?
explain income effect,substitution effect and prise effect with the help of indifference curve
The price of coffee rose sharply last month, while the quantity sold remained the same. Five people suggest various explanations: Leonard: Demand increased, but supply was perfectly inelastic. Sheldon: Demand increased, but it was perfectly inelastic. Penny: Demand increased, but supply decreased at the same time. Howard: Supply decreased, but demand was unit elastic. Raj: Supply decreased, but demand was perfectly inelastic. Who could possibly be right? Use graphs to explain your answer.
why will demand for cars increase in the future? why demand for cars will decrease in the future?
Boston chicago
Pairs of Red socks per Worker per Hour
3 2
Pairs of White socks per Worker per Hour
3 1
a. Without trade, what is the price of white socks (in terms of red socks) in Boston? What is the price in Chicago?
b. Which city has an absolute advantage in the production of each color sock? Which city has a comparative advantage in the production of each color sock?
c. If the cities trade with each other, which color sock will each export?
d. What is the range of prices at which mutually beneficial trade can occur?
The demand and supply equations are Qd = 100 – 10P and Qs = 30 + 5P. Compute for the
Price equilibrium and quantity equilibrium.
