The following are my economics question....
2. For each of the following, illustrate the shift of one of the curves in the AS/AD model: a Business confidence rises as firms expect an increase in GDP, sales, and profits. b. A rise in inflation increases people's expectations of inflation in the medium run. c. The distribution of high speed internet to rural areas boosts productivity. 3. Illustrate the following periods of history with the AS/AD model: a. Government spending for the Vietnam War during the late 1960s pushed up the rate of inflation from about 1% to 5%. b. In 1973-74, OPEC engaged in an oil embargo, causing an increase in oil prices. Inflation rose to above 9% in 1975, and the unemployment rate rose above 8%. (Illustrate the immediate effect.) c. After another oil price shock in 1979, the Fed conducted a contractionary monetary policy (choosing a lower target inflation rate). Inflationary expectations fell. The unemployment rate rose to almost 10%, but inflation fell from 9% to 4%. d. The 1990s brought an era of innovation, increasing global competition, and weakened unions from years of anti-union government policies. By 1998, the unemployment rate was 4.4% and inflation was 1.6%.Case Discussion: Hazelton International Led. (click here to post) In your initial post (due by 11:59 PM on Wednesday), please respond to the following prompt: 1. Who are the main stakeholders in this situation? What are the perceptions, motivations and interests of each of these groups and what are their goals (in order of priority if there is more than one goal)? 2. What are the major issues or problems Involved in managing this project and what are the important implications for you (Dan Simpson) In managing this project successfully? 3. How successful is the project? Should the company take projects like this one in the future? Please visit the Hofstede Centre website (web links opens in a new window) OR the Cyborlink website (web link opens in a new window) and look at Indonesia and the cultural dimensions. Use these resources to help build your explanation for the Hazelton Case. By 11:59 PM on Sunday, please reply to at least 2 classmates and extend the conversation by providing additional information, examples, supplemental sources, an alternative view point or asking questions, Grading: this assignment is worth 10 points. You will be graded based on the following criteria: click here to view the rubric At39. Determine which of the following strategies creates a ratio spread, assuming all options are European. (A) Buy a one-year call, and sell a three-year call with the same strike price. (B) Buy a one-year call, and sell a three-year call with a different strike price. (C) Buy a one-year call, and buy three one-year calls with a different strike price. (D) Buy a one-year call, and sell three one-year puts with a different strike price. (E) Buy a one-year call, and sell three one-year calls with a different strike price. IFM-01-18 Page 19 of 105 40. An investor is analyzing the costs of two-year, European options for aluminum and zinc at a particular strike price. For each ton of aluminum, the two-year forward price is 1400, a call option costs 700. and a put option costs $50. For each ton of zinc, the two-year forward price is 1600 and a put option costs 550. The annual effective risk-free interest rate is 6%. Calculate the cost of a call option per ton of zinc. (A) 522 (B) 800 (C) 878 (D) 900 (E) 1231 41. XYZ stock pays no dividends and its current price is 100. Assume the put, the call and the forward on XYZ stock are available and are priced so there are no arbitrage opportunities. Also, assume there are no transaction costs. The annual effective risk-free interest rate is 1%. Determine which of the following strategies currently has the highest net premium. (A) Long a six-month 100-strike put and short a six-month 100-strike call (B) Long a six-month forward on the stock (C) Long a six-month 101-strike put and short a six-month 101-strike call (D) Short a six-month forward on the stock (E) Long a six-month 105-strike put and short a six-month 105-strike call42. An investor purchases a non-dividend-paying stock and writes a f-year, European call option for this stock, with call premium C. The stock price at time of purchase and strike price are both K. Assume that there are no transaction costs. The risk-free annual force of interest is a constant r. Let S represent the stock price at time t. S > K. Determine an algebraic expression for the investor's profit at expiration. (A) Ce" (B) C(1+m)-S+K (C) Ce" -S+ K (D) Ce" +K(1-e" ) (E) C(1+r) +K[1-(+r)' ] IFM-01-18 Page 21 of 105 43. You are given: i) An investor short-sells a non-dividend paying stock that has a current price of 44 per share. ii) This investor also writes a collar on this stock consisting of a 40-strike European put option and a 50-strike European call option. Both options expire in one year. The prices of the options on this stock are: Strike Price Call option Put option 40 8.42 2.47 50 3.86 7.42 iv) The continuously compounded risk-free interest rate is 5%. v) Assume there are no transaction costs. Calculate the maximum profit for the overall position at expiration.46. Determine which of the following statements about options is true. (A) Naked writing is the practice of buying options without taking an offsetting position in the underlying asset. (B) A covered call involves taking a long position in an asset together with a written call on the same asset. (C) An American style option can only be exercised during specified periods, but not for the entire life of the option. (D) A Bermudan style option allows the buyer the right to exercise at any time during the life of the option. (E) An in-the-money option is one which would have a positive profit if exercised immediately. IFM-01-18 Page 24 of 105 47. An investor has written a covered call. Determine which of the following represents the investor's position. (A) Short the call and short the stock (B) Short the call and long the stock (C) Short the call and no position on the stock (D) Long the call and short the stock (E) Long the call and long the stock 48. For a certain stock, Investor A purchases a 45-strike call option while Investor B purchases a 135-strike put option. Both options are European with the same expiration date. Assume that there are no transaction costs. If the final stock price at expiration is S, Investor A's payoff will be 12. Calculate Investor B's payoff at expiration, if the final stock price is S. (A) 0 (B) 12 (C) 36 (D) 57 (E) 78
