Solve the following questions
Use the willingness-to-pay information about the buyers (Ariel, Bridget, and Connie) and the willingness-to-accept information about the sellers (Daniel, Etienne, and Franklin) below to construct a "stepped" demand and supply diagram like this one from my notes on Unit #7. (You'll also have one question to answer below.) Willingness-To-Pay information Ariel Bridget Connie willingness-to-pay $5 $7 $9 for the 1 widget willingness-to-pay $4 $6 $7 for the 2" widget willingness-to-pay $3 $4 $5 for the 3 widget willingness-to-pay $2 $3 $4 for the 4 widget willingness-to-pay $1 $2 $3 for the 5" widget Willingness-To-Accept information A Daniel Etienne Franklin willingness-to-vi payments accounts, still PLEsuit IsOnly foreign currency traded with the Canadian dollar. 7. For each of the following situations, outline the effect on the price of the Canadian dollar in terms of US dollars and draw a demand and supply graph that illustrates the changes that occur in the foreign exchange market for the Canadian dollar. . A contractionary monetary policy initiated by the Bank of Canada raises Canadian interest rates. b. Canada's real output rises at a time when real output in the United States is falling. c. Americans (but not Canadians) find Canada a more attractive place to make financial investments. d. Given Canada's aging population, more Canadian "snowbirds" travel to the United States each winter. e. Due to a credit crisis that affects US financial institutions more than it does Canadian ones, Canada's attractiveness as a destination for direct and portfolio investment increases. f. The Bank of Canada initiates an expansionary monetary policy that reduces Canadian interest rates.FINANCIAL MARKETS REVIS 7) Distinguish between the terms "coin div" and "ex - div" as used in financial markets. JUNE 2009 QUESTION ONE, QUESTION 10 a) Explain the main factors behind the rapid development of capital markets in your country. VE A DECEMBER 2006 QUESTION SIX QUESTION 11 a ) Discuss the role of a capital markets authority in the development of a country's financial markets six QUEST ets QUESTION 12 a) Describe the benefits to a country of integrating its financial markets with those of other country. QUESTION 13 (b) a) Distinguish between primary and secondary securities market. b) "Despite the large investment in the stock exchange and the various government incentives, only a few companies are listed at the stock exchange of the three East Africa Countries", This was the opening remark by the guest speaker in a seminar whose theme was "Developing our capital market." Required: i) The advantage of being listed at the stock exchange. ii) Highlight four factors that may hinder companies from being listed at the stock exchange. QUESTION 14 a) Briefly explain how the "Dow theory " views the movement of the market prices of shares traded on a stock exchange b) Identify and briefly explain the factors that must be taken into account in the design and construction of a market index for shares c) Joseph Kimeu is trying to determine the value of Bidii Ltd's ordinary shares. The earnings growth rate over his planned six-year holding period is estimated to be 10% and the dividend payout ration in 60%. The ending price earnings (P/E) ration is expected to be 20 and the current earning per share are Sh. 4. The required rate of return for this share is 15%. Required Compute the market price of Bidii Lid's ordinary share QUESTION 15 b) Briefly describe the three forms of capital markets efficiency. are familiar with. Highlight four factors that may underlie the low rate of listing of companies in a stock exchange you QUESTION 16 (a) Highlight four advantages and disadvantages to a company of being listed on a stock exchange. (b) In relation to the stock exchange" Section 3 F.M4- Suppose that two motorcycle manufacturers, Honda and Suzuki, are considering offering 10-year full coverage warranties for their new motorcycles. Although the warranties are expensive to offer, it could be disastrous for one firm if it does not offer a warranty while its competitor does. Let's assume the payoffs for the firms are as follows: Honda\\ Suzuki Offer Don't Offer Warranty Warranty Offer Warranty m 120, 10 Don't Offer Warranty 10, 120 50,50 (a) If the game is played once, what is the outcome? (b) Suppose the game is repeated three times. Will the outcome change from your answer in (a)? Explain. (c) Now, suppose the game is innitely repeated and Suzuki and Honda formed an agreement to not offer warranties to their customers. Each rm plans the use of a grim trigger strategy to encourage compliance with the agreement. At what level of 5 (discount factor] would Honda be indifferent about keeping the agreement vs. cheating on it? Explain. 5- Two firms have technologies for producing identical paper clips. Assume that all paper clips are sold in boxes containing 100 paper clips. Firm A can produce each box at unit cost of on = 56 whereas rm B {less efcient} at a unit cost of EB = 58. {i} Suppose that the aggregate market demand for boxes of paper clips is p = 12 012, where p is the price per box and C1 is the number of boxes sold. Solve for the Nash-Bertrand equilibrium prices P} and PE , and the equilibrium prots 11': and 1:5. Explain your reasoning! {iii Answer the previous question assuming that rm A has developed a cheaper production technology so its unit cost is now given by CA = $2. 01:36 B + M 4G 13% coursehero.com/qa/wai 3 . . . Potato is produced according to the function: q = 10ka/1-a where q is the quantity produced, & represents land and / represents the number of workers. The farmer is a price taker with respect to all prices. Assume a = 0.5. (a) Write the general form for the farmer's cost minimization problem. (b) Derive the conditional input demand functions for ke and / given this particular production function. (c) Derive the Total Cost Function. (d) Suppose wage of workers=9 and rent for land=4 and the farmer wants to produce q = 100 units of output. Find the optimal land and labor demand. (e) Derive the Short-Run Total Cost Function. (f) Suppose the firm wants to increase the output level to 120. What is the labor and land demand in the short run? Show that short-run total cost is higher than long run total cost in that case. (a) First consider an economy where the government budget is required to be balanced in recession. The economy is given by: C = co + c(Y -T) T =to+tiY I = 1 G =T with 0
