Needed urgently

32. Judy decides to take a short position in 20 contracts of S&P 500 futures. Each contract is for the delivery of 250 units of the index at a price of 1500 per unit, exactly one month from now. The initial margin is 5% of the notional value, and the maintenance margin is 90% of the initial margin. Judy earns a continuously compounded risk-free interest rate of 4% on her margin balance. The position is marked-to-market on a daily basis. On the day of the first marking-to-market, the value of the index drops to 1498. On the day of the second marking-to-market, the value of the index is X and Judy is not required to add anything to the margin account. Calculate the largest possible value of X. (A) 1490.50 (B) 1492.50 (C) 1500.50 (D) 1505.50 (E) 1507.50 IFM-01-18 Page 16 of 105 33. Several years ago, John bought three separate 6-month options on the same stock. Option I was an American-style put with strike price 20. Option II was a Bermuda-style call with strike price 25, where exercise was allowed at any time following an initial 3-month period of call protection. Option III was a European-style put with strike price 30. When the options were bought, the stock price was 20. When the options expired, the stock price was 26. The table below gives the maximum and minimum stock price during the 6 month period: Time Period: 1* 3 months of Option Term 2" 3 months of Option Term Maximum Stock Price 24 28 Minimum Stock Price 18 22 John exercised each option at the optimal time. Rank the three options, from highest to lowest payoff. (A) I> II > III (B) I > III > II (C) I > I > III (D) III > I> II (E) III > II > IConsider the human capital growth model with the representative consumer. The efciencyr pa rameter of human capital accumulation technology is b. The total productivity factor is given by z = 1-5. Denote by H; the human capital accumulated in period t? and by u the time spent working in period t. Assume the initial human capital is H0 2 1. Now, assume the consumer has to choose between (v.1, b1) 2 (0.9, 10.35) and (152,52) 2 (0.8, 5.20). 1. Using the predictions of the Endogenous Growth Model for the consumption path, which set of (u, b) will you recommend to the consumer in the long term. 2. After how many years is your recommendation valid? Exercise 4.1 You have the following annual data for an economy: Year Real GDP Consumer price Labour force Employment (2007 $) index (2007=100) (000) (000) 2012 1,282 109.1 17.593 16.537 2013 1,307 111.9 17.857 16.696 2014 1,288 138.9 18.125 16.856 (a) What was the rate of growth of real GDP from 2012 to 2013, and 2013 to 2014? (b) What was the rate of inflation in 2013 and in 2014? (c) What were the rates of growth of the labour force and employment from 2012 to 2013, and 2013 to 2014? (d) What happened to the unemployment rate between 2012 and 2013, and between 2013 and 2014? Exercise 4.2 Suppose the economy represented by the table in Exercise 4.1 above had a population of 27.885 thousand in 2014. (a) What were the participation and employment rates in the economy in that year? (b) Suppose a mild recession in that year discouraged some unemployed workers and they stop looking for work. As a result the participation rate fell to 64.5 per cent. How would the unemployment rate and the employment rate be affected? Why? Exercise 4.3 If brewers buy barley and hops from agricultural producers, natural gas to fire their brew kettles from gas companies and bottles from glass manufacturers as in the following table, what is the value added of the brewing industry? If brewers also wholesale some of their output to pubs, is that output counted in GDP? Explain your answer. Costs (millions of current $) of: Brewery retail sales Barley and hops Natural gas Bottles 1000 350 125 150 Exercise 4.4 The economy has two main industries. One produces services and the other produces goods. The services industries produce services for households and businesses with a total market 100 Economic activity & performance value of $10,000. The goods industries produce goods for the use of both households and busi- nesses with a total market value of $5,000. The service industries spend $1,000 on computers and paper and envelopes supplied by the goods industries. The goods industries spend $1,000 to buy financial, insurance, advertising and custodial services supplied by the service industries. Explain how you measure nominal GDP in this economy and the value of output you find?Exercise 4.5 Suppose you are given the following data on incomes and expenditures for the econ- omy of Westland, in current prices for factors of production and outputs. Consumption expenditures 2,500 Employment compensation 2,800 Government expenditure 800 Net indirect taxes 150 Exports 1,200 Gross corporate surplus and mixed income 1,050 Investment expenditure 600 Imports 1,100 (a) What is the value of nominal GDP measured by expenditures? (b) What is net domestic income? (c) What is the value of nominal GDP measured by the income approach? Exercise 4.6 Suppose GDP is $2,000, consumption expenditure is $1,700, government expenditure is $50, and net exports are $40. (a) What is business investment expenditure? (b) If exports are $350, what are imports? (c) In this example, net exports are positive. Could they be negative? Exercise 4.7 Consider the following information about a hypothetical economy: Year Nominal GDP GDP deflator Population (billions $) (2000 = 100) (millions $) 2012 750 104.0 25.0 2013 825 112.0 30.0 (a) Calculate the growth (percentage change) in nominal GDP from 2012 to 2013. Exercises for Chapter 4 _ 101 (b) What was real GDP in 2012 and 2013? How much did real GDP grow? (c) If changes in the standard of living can be measured by changes in real per capita GDP, did growth in nominal and real GDP raise the standard of living in this economy from 2012 to 2013? (d) Explain the reasons for the change in standard of living that you have found.#1.3 Consider two populations divided into three stratum each. In population A, the 40% poorest have 10% of total income, the 40% of the middle have 40% and the 20% richest have 50%. In population B. the three stratum (40% poorest, 40% of the middle and 20% richest) have 20%, 20% and 60% of total income, respectively. We suppose there is no inequality within each stratum. Calculate the Gini index for each one of the two populations. Do the same for the Theil-T index and for the Theil-L indexes. Based on these results, verify in each one of the two populations the income distribution is more unequal. Comment the results taking into account the Lorenz curve for each popula- tion