The document discusses types of exchange rates during the Asian financial crisis. It explains that countries use either fixed or floating exchange rates, each with advantages, and some countries intermediate between the two. The appropriate exchange rate regime depends on a country's economic environment and stability.

1. Acca Notes
Allowing for inflation and taxation
Allowing for inflation
As the inflation rate increases so will the minimum return required by an investor
The nominal interest rate incorporates inflation.
When the nominal rate of interest > rate of inflation = positive real rate.
When the rate of inflation > nominal rate of interest = negative real rate.
The relationship between real and nominal rates of interest is given by the Fisher formula:
1.2 Do we use the real rate or the nominal rate?
The rule is as follows. a) If cash flows expressed actual number of dollars that will be received/paid
on the various future dates, we use the nominal rate for discounting. b) If cash flows expressed in
terms of the value of the ... Show more content on Helpwriting.net ...
– Can be allowed for in project evaluation by risk and uncertainty analysis. Plans should be made to
obtain 'contingency funds ', (bank overdraft).
Inflation may be general, affecting prices of all kinds, or specific to particular prices.
Generalised inflation has the following effects.
a) Capital – Since non current assets/stocks will increase in money value, the same quantities of
assets must be financed by increasing amounts of capital. b) Demand – Inflation means higher costs
and higher selling prices. The effect of higher prices on demand may not be easy to predict. – A
company that raises its prices by 10% because the general rate of inflation is running at 10% might
suffer a serious fall in demand. c) Gearing/COC – Inflation, because it affects financing needs, is
also likely to affect gearing, and so the cost of capital.
2 Allowing for taxation
Taxation is a major practical consideration for businesses. It is vital to take it into account in making
decisions.
Assumptions which may be stated in questions are as follows.

2. a) Tax is payable in the year following the one in which the taxable profits are made. b) Net cash
flows from a project should be considered as the taxable profits (not just the taxable revenues)
arising from the project (unless an indication is given to the contrary).
2.1 Tax–allowable depreciation
Tax–allowable depreciation (capital allowances) is used to reduce taxable profits, and the
consequent
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6. Types Of Exchange Rate During The Asian Financial Crisis
Introduction
An exchange rate tells you how much of one currency you can exchange for another. Generally,
there are two types of exchange rate which is widely used by many countries: fixed and floating
exchange rate. Nowadays, it is necessary to know what are their advantages as domestic currencies
are essential to the method that economies run. But they are both not perfect. In 1973, with the
collapse of the Bretton Woods system, countries that used fixed exchange rate were seriously
affected and floating exchange rate rose afterward. However, there still had some debates on both
fixed–rate and floating exchange rate. Especially after the Asian financial crisis in 1997, the debates
became more intense. A fixed exchange rate once again favored by some countries. As we can see
from the history, they have benefits and drawbacks. Each of them has their own characteristics. It is
not possible to determine which exchange rate is better because the choice of the appropriate one
may vary from different countries. In other words, the exchange rate regime changes along with the
development of the international economic environment. That is why there are some different
exchange rate regimes which lies between them in reality. Developing countries that have unstable
economies and politics mostly use the fixed exchange rate to guarantee their residents a normal
standard of living. On the other hand, developed countries such as the U.S, Great Britain are using
floating exchange because
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10. Green Affordable Housing Essay
Introduction
Green building has come forth over the past decade as a positive movement to produce high–
performance, energy–efficient structures that improve comfort and health for resident, meanwhile,
minimizing environmental impacts. Nevertheless, a common sense that green features is expensive
and not suitable for affordable housing. Recent studies are showed that green buildings have a
modest initial cost premium, but the long–term benefits far exceed the additional capital costs. For
this report, I will introduce a financial analysis –Net Present Value (NPV), and discuss the impacts
of NPV analysis for green affordable housing.
Definition of affordable housing
Affordable housing means housing is affordable to those households with a ... Show more content
on Helpwriting.net ...
To convert future dollars to present dollars, net present value analysis inserts a number " discount
rate".
Here are 4 basic steps for NPV analysis Forecast the benefits and costs in each year.
We need to forecast the benefits and costs in today's dollar include opportunity costs and use
expected value to estimate uncertain benefits and costs, omit the sunk costs, non–monetary cost and
benefits. Determine a discount rate.
The discount rate is a nominal discount rate. We can use this formula to converse real to nominal.
(1+real discount rate)*(1+future CPI)–1=nominal discount rate
Future CPI = Future consumer price index Calculate the net present value.
∑net present value=∑((total benefits–total costs))⁄〖(1+r)〗^(length ) r = discount rate Determine
alternatives
After calculate the NPV, we are not only calculated monetary costs and benefits, we also need to
consider non–monetary costs and benefits.
Life–cycle Costing (LCC)
Life–cycle costing is an economics tool to assess the total cost of a product. Another purpose for this
tool, as a management decision tool, for comparing different parts conflicts by concentration on
facts, money and time. By using Life–cycle costing, total cost of the product can be calculated over
the total span of product life cycle. All parties on this project, such as product suppliers, consumers
and owners are benefit from LCC.
NPV analysis application in green affordable housing
This report introduces net

11. ... Get more on HelpWriting.net ...

15. How Expensive Are Us Equities?
How Expensive Are US Equities?
I mentioned last week that US P/E multiples were vulnerable to a correction. In the near–term, the
biggest threat is policy tightening by the Fed, while, over the intermediate horizon, rising
inflationary expectations present a potentially bigger threat. Most valuation models are, however,
not robust enough to indicate the precise timing of market adjustments. Against this backdrop, it is
probably too dangerous to place excessive faith in just one single measure. It is, therefore, wiser to
look at a wide range of valuation measures to confirm that equities are mispriced relative to
fundamentals. The Rule of Twenty and the equity market capitalisation to GDP ratio both suggest
that US equities are expensive. ... Show more content on Helpwriting.net ...
What are other valuation measures saying?
Market Capitalisation to GDP Ratio Also High
Equity prices capture investors' perceptions of the future profitability of corporate entities.
Periodically, there can be a disconnection between such expectations and what the real economy can
truly deliver to facilitate corporate profits growth. Over the long run, the boundaries of corporate
performance are firmly imposed by the global economy. In the interim, however, there can be
company/sector specific factors that produce profits growth in excess of the aggregate economy. An
elevated level of stock market capitalisation to GDP is often an indication that investors have
become somewhat too exuberant. In the US, the current level is running at 170%, very close to the
all–time high of 183% in March 2000. This would, therefore, suggest that the US market has
reached vulnerable territory. Valuation measures are not, however, without their critics and three
critiques have been levied against this particular measure. Firstly, the ratio does not supposedly
adjust for the impact of technological innovation on operating margins, as well as lower interest
expenses. Secondly, the geographic origin of US corporate profits is diverse. Nearly 50% of
S&P500 revenues are derived from overseas economies, implying that US GDP is an inappropriate
valuation measurement gauge. Finally, the sector composition of the S&P500 is substantially
different to the real economy. My thoughts on
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19. Fin361 Appendix 3a
A Guide to Earnings and Financial Reporting Quality A Guide to Earnings and Financial Reporting
Quality Quality of reported financial information is a critical element in evaluating financial
statement data. The higher the quality of financial reporting, the more useful the information is for
business decision making. 5–2 A Guide to Earnings and Financial Reporting Quality There are a
number of areas on the earnings statement that provide management with opportunities for
influencing the outcome of reported earnings. 5–3 1 A Guide to Earnings and Financial Reporting
Quality These areas include accounting choices, estimates, and judgments changes in accounting
methods and assumptions discretionary expenditures ... Show more content on Helpwriting.net ...
5–17 Sales Real versus nominal growth Sales (in millions) As reported (nominal) Adjusted (real)
2007 $178,199 $178,199 2006 $171,179 $176,019 % Change 4.10 1.24 Using base period CPI
(1982–1984=100) (2007CPI/2006CPI) x 2006 Sales = Adjusted Sales (207.3/201.6) x $171,179 =
$176,019 When adjusted for inflation, sales grew at a rate of 1.24%, which means that sales growth
has kept pace with general inflation. 5–18 6 Cost of Goods Sold Key areas that affect earnings
quality 6. 7. 8. Cost–flow assumption for inventory Base LIFO layer liquidations Loss recognitions
on write–downs of inventories 5–19 Cost of Goods Sold Cost–flow assumption for inventory LIFO
results in the matching of current costs with current revenues and produces higher quality earnings
than either FIFO or average cost. Inventory accounting system used is described in the note that
details accounting policies or the note that discusses inventory. 5–20 Cost of Goods Sold Base LIFO
layer liquidation Base LIFO layer liquidation occurs when companies are shrinking rather than
increasing inventories. There is an actual reduction of inventory levels, but the earnings boost stems
from the cost flow assumption that the older and lower–priced products are being sold. 5–21 7
Cost of Goods Sold Base LIFO layer liquidation Effects of LIFO reductions are disclosed in the
notes and can be substantial. Reduces the quality of earnings, because there is an improvement in
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23. Interest and Real Rate
P6–1 Interest rate fundamentals: The real rate of return Carl Foster, a trainee at an Investment
banking firm, is trying to get an idea of what real rate of return investors Are expecting in today's
marketplace. He has looked up the rate paid on 3–month U.S. Treasury bills and found it to be 5.5%.
He has decided to use the rate of change In the Consumer Price Index as a proxy for the inflationary
expectations of Investors. That annualized rate now stands at 3%. On the basis of the information
That Carl has collected, what estimate can he make of the real rate of return?
P6–2 Real rate of interest To estimate the real rate of interest, the economics division of Mountain
Banks–a major bank holding company–has gathered the ... Show more content on Helpwriting.net ...
If the real rate of interest is currently 2.5%, find the nominal rate of interest on each of the following
U.S. Treasury issues: 20–year bond, 3–month bill, 2–year note, and 5–year bond.
b. If the real rate of interest suddenly dropped to 2% without any change in inflationary
expectations, what effect, if any, would this have on your answers in part a? Explain.
c. Using your findings in part a, draw a yield curve for U.S. Treasury securities.
Describe the general shape and expectations reflected by the curve.
d. What would a follower of the liquidity preference theory say about how the preferences of lenders
and borrowers tend to affect the shape of the yield curve drawn in part c? Illustrate that effect by
placing on your graph a dotted line that approximates the yield curve without the effect of liquidity
preference.
e. What would a follower of the market segmentation theory say about the supply and demand for
long–term loans versus the supply and demand for short–term loans given the yield curve
constructed for part c of this problem?
P6–6 Nominal and real rates and yield curves A firm wishing to evaluate interest rate behavior has
gathered
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27. Financial Statements And Evaluating A Corporation Essay
Using Financial Statements to evaluate a corporation The basic financial statements are the primary
means for providing information of the company and are prepared from the balances of the
accounting records of the company at a given date. Classification and summary of accounting data
are properly structured financial statements. These are Income Statement, Accounting Profit,
Economic Profit, and Balance sheet. The main objectives of financial statements are to help
managers of an organization to determine whether decisions about funding were most appropriate,
and thus determine the future of investments. Understand the elements that can be used to compare
financial ratios and different analysis techniques that can be applied within a company. Describe
some of the measures that should be considered for decision–making and alternative solutions to the
various problems affecting the company, and help planning the direction of investments made by the
organization. Using the most common reasons to analyze liquidity and activity of a company.
Analyze the relationship between debt and financial leverage presenting the financial statements.
Assess profitability. Determine the position held by the company in the competitive market in which
it operates. Provide employees with enough information they need to keep them informed about the
situation under which the company works. Financial statements are very useful to compare the
current status of different companies in the market. By
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31. Finance: Bonds
Managerial Finance
Chapter 5, Quiz
Name: Emily Smith
Multiple Choice: Please circle the correct answer choice
. Which of the following events would make it more likely that a company would choose to call its
outstanding callable bonds? a. The company's bonds are downgraded. b. Market interest rates rise
sharply. c. Market interest rates decline sharply. d. The company 's financial situation deteriorates
significantly. e. Inflation increases significantly. . A 10–year bond with a 9% annual coupon has a
yield to maturity of 8%. Which of the following statements is CORRECT? a. If the yield to maturity
remains constant, the bond's price one year from now will be higher than its current ... Show more
content on Helpwriting.net ...
What is their yield to call (YTC)?
. Garvin Enterprises' bonds currently sell for $1,150. They have a 6–year maturity, an annual coupon
of $85, and a par value of $1,000. What is their current yield?
. Assume that you are considering the purchase of a 15–year bond with an annual coupon rate of
9.5%. The bond has face value of $1,000 and makes semiannual interest payments. If you require an
11.0% nominal yield to maturity on this investment, what is the maximum price you should be
willing to pay for the bond?
. If 10–year T–bonds have a yield of 6.2%, 10–year corporate bonds yield 8.5%, the maturity risk
premium on all 10–year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a
zero liquidity premium for T–bonds, what is the default risk premium on the corporate bond?
. 5–year Treasury bonds yield 5.5%. The inflation premium (IP) is 1.9%, and the maturity risk
premium (MRP) on 5–year bonds is 0.4%. What is the real risk–free rate, r*?
. Crockett Corporation 's 5–year bonds yield 6.85%, and 5–year T–bonds yield 4.75%. The real risk–
free rate is r* = 2.80%, the default risk
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35. Capital Asset Pricing Model
Chapter 9: Multifactor Models of Risk and Return. (QUESTIONS) 1. Both the capital asset pricing
model and the arbitrage pricing theory rely on the proposition that a no–risk, no–wealth investment
should earn, on average, no return. Explain why this should be the case, being sure to describe
briefly the similarities and differences between CAPM and APT. Also, using either of these theories,
explain how superior investment performance can be establish.
Answer:
Both the Capital Asset Pricing Model and the Arbitrage Pricing Model rest on the assumption that
investors are reward with non–zero return for undertaking two activities:
(1) committing capital (non–zero investment); and (2) taking risk. If an investor could earn a
positive return ... Show more content on Helpwriting.net ...
6. It is widely believed that changes in certain macroeconomic variables may directly affect
performance of an equity portfolio. As the chief investment officer of a hedge fund employing a
global macro–oriented investment strategy, you often consider how various macroeconomic events
might impact your security selection decisions and portfolio performance. Briefly explain how each
of the following economic factors would affect portfolio risk and return: (a) industrial production,
(b) inflation, (c) risk premia, (d) term structure, (e) aggregate consumption, and (f) oil price.
Answer:
The value of stock and bonds can be viewed as the present value of expected future cash flows
discounted at some discount rate reflecting risk. Anticipated economic conditions are already
incorporated in returns. Unanticipated economic conditions affect returns.
Industrial production: Industrial production is related to cash flows in the traditional discounted cash
flow formula. The relative performance of a portfolio sensitive to unanticipated changes in industrial
production should move in the same direction as the change in this factor. When industrial
production turns up or down, so too shares in the return on the portfolio. Portfolios sensitive to
unanticipated changes in industrial production should be compensated for the exposure to this
economic factor.
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39. Capital Budgeting
Assessment: Lite orange juice Project
1. Define the term "incremental cash flow". Since the project will be financed in part by debt, should
the cash flow analysis include the interest expense?
Incremental cash flow is the additional operating cash flow that an organization receives from taking
on a new project. A positive incremental cash flow means that the company 's cash flow will
increase with the acceptance of the project.
Cash flow analysis should not include the interest expense. We discount project cash flows with a
cost of capital that is the rate of return required by all investors. Interest expenses are part of the
costs of capital. If we subtracted them from cash flows, we would be double counting capital costs.
... Show more content on Helpwriting.net ...
The opportunity cost of renting the plant is included in the analysis as a after tax cost (cash outflow)
because it will not be earned as a result of utilizing the asset for the project.
The cannibalization on Classic orange juice is a type of externality that should be included in the
analysis as after tax cost (cash outflow) because the new project takes sales away from the existing
product.
The new project requires an increase in inventories in year 0 and year 3. This will change the net
working capital. It will represent an outflow for year 0 and 3, and an inflow when the project
terminates because we will recover it.
5. The project is assumed to end in year 4. Do you think that this is realistic? Can you estimate the
value of the project's operating cash flows beyond year 4? State any assumptions you made.
This project is reasonable and worth to take it. It will add more value to the company since its NPV
is positive and has an attractive IRR and MIRR (higher than WACC). Moreover, the breakeven
occurs in year two, in the middle of the project lifecycle, which is a good sign as well.
Calculations to estimate the following years 5 and 6 are done in the excel tab called 'Estimation
Years 5 and 6'. Taking into account that the predicted remaining
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43. Business Finance
UBFF2013 BUSINESS FINANCE
Question:
1.
(a)
Frodo Baggins has RM1,500 to invest. His investment counselor suggests an investment that pays
no stated interest but will return RM2,000 at the end of 3 years. (i) (ii) What annual rate of return
will Frodo earn with this investment? Frodo is considering another investment, of equal risk, that
earns an annual return of 8%. Which investment should he make and why?
(b)
Samwise Gamgee was seriously injured in an industrial accident. He sued the responsible parties
and was awarded a judgment of RM2,000,000. Today, he and his attorney are attending a settlement
conference with the defendants. The defendants have made an initial offer of RM156,000 per year
for 25 years. Samwise plans ... Show more content on Helpwriting.net ...
A variety of proposals are being considered by management to redirect the firm's activities.
Determine the impact on share price for each of the following proposed actions and indicate the best
alternative. (a) (b) (c) (d) Do nothing, which will leave the key financial variables unchanged. Invest
in a new machine that will increase the dividend growth rate to 6% and lower the required return to
14%. Eliminate an unprofitable product line, which will increase the dividend growth rate to 7% and
raise the required return to 17%. Merge with another firm, which will reduce the growth rate to 4%
and raise the required return to 16%.
UBFF2013 BUSINESS FINANCE
(e) Acquire a subsidiary operation from another manufacturer. The acquisition should increase the
dividend growth rate to 8% and increase the required return to 17%.
5.
Aragorn Enterprises is evaluating an unusual investment project. What makes the project unusual is
the stream of cash inflows and out flows shown in the following table:

44. Year 0 1 2 3 4 (a) (b) (c) (d) (e)
Cash flow (RM) 200,000 –920,000 1,582,000 –1,205,200 343,200
Why is it difficult to calculate the payback period for this project? Calculate the investment's net
present value at each of the following discount rates: 0%, 5%, 10%, 15%, 20%, 25%, 30%, 35%.
What does your answer to part (b) tell you about this project's IRR? Should Aragorn invest in
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48. Advantages And Disadvantages Of Historical Cost Accounting
1. Academicians as well as practitioners have long debated the issue of historical cost accounting
versus current value accounting.
The historical cost is the original nominal monetary value of the items purchased. Based on the
historical cost concept, it states that the amount of the assets acquired should be recorded with the
original amount paid at date of acquisition and should include all costs necessary to get the asset in
place and ready for use. Historical cost helps to distinguish an asset's original cost from its current
replacement cost, current market cost and inflation–adjusted cost as it does not generally reflect the
current market valuation. It is never adjusted for the future market or economy changes and
inflation. For example, ... Show more content on Helpwriting.net ...
The one of the advantages is the historical cost can be verified. The cost of purchases at date of
acquisition is documented with contracts, invoices and payments. It is useful in matching the
changes in profits or expenses relating to the asset purchased, as well as determining the past
opportunity costs. With historical cost accounting, managers have the resources to forecast the
future operational costs. On the other hand, FASB has decided to use the historical cost principle
because it is reliable and objective. It is also easy to use and understand. The disadvantages of
historical cost accounting include that it does not evaluate the current market value. It does not
really tell the financial users how much the assets are currently worth. Furthermore, historical cost
accounting does not record the opportunity cost of using the old assets. It does not record the loss in
real value of assets as a result of inflation or the gain in real value of assets as a result of deflation. It
is claimed that it is not useful for financial information users to compare the corporate's performance
over time. Lastly, the financial information in historical cost concept presents an old interest rate and
outdated
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52. Exchange Rate Determination
exchange rate determination
"Having endeavored to forecast exchange rates for more than half a century, I have understandably
developed significant humility about my ability in this area..."[1] – Alan Greenspan
Figure 1: Exchange Rate Determination
[pic]
Source: Exchange Rate Determination
I. Short–Run Forecasting Tools
Short–term changes in exchange rates are the most difficult to predict and are often determined
based on bandwagon effects, overreaction to news, speculation, and technical analysis.[2]
Trend–Following Behavior is the tendency for the market to follow a trend. In other words an
increase in the exchange rate is more likely to be followed by another increase.
Investor Sentiment is based on the ... Show more content on Helpwriting.net ...
Figure 2: International Parity Conditions
[pic]
Source: Exchange Rate Determination
1) Purchasing power parity – states that since the prices should be the same across countries, the
exchange rate between two countries should be the ratio of the prices in each country.
[pic]
Example: If a hamburger is $2.54 in the United States and 3.60 real (R$) in Brazil, then the PPP spot
rate should be:
[pic] If the actual exchange rate is[pic], then according to the PPP theory the Brazilian real is
undervalued by 35%. [pic] FYI McDonalds' Big Mac is produced locally in almost 120 countries![7]
2) Covered interest–rate parity –the idea that an imbalance in parity conditions can create a "risk
less" opportunity for an arbitrager.

53. Exhibit 6.7 Covered Interest Arbitrage (CIA)[8] [pic]
Example: Step 1: Convert $1,000,000 at the spot rate of ¥106.00/$ to ¥106,000,000 Step 2: Invest
the proceeds, (¥106,000,000), in a euroyen account for six months, earning 4% per annum, or 2%
for 180 days. Step 3: Simultaneously sell the future yen proceeds (¥108,120,000) forward for dollars
at the 180–day forward rate of ¥103.50/$. Note: at this point you have
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57. Week 6 Quiz Essay
Grade Details – All Questions 1. Question : (TCO F) The size of the labor force in a community is
500, and 400 of these folks are gainfully employed. In this community, 100 people over the age of
16 do not have a job and are not looking for work. In addition, 200 people in the community are
under the age of 16. The unemployment rate is ______. Student Answer: 500 total –400 working =
100 not working. 100/500= 1/5 = 20% unemployment rate of people 16 or over. Instructor
Explanation: The unemployment rate is calculated by dividing the number of unemployed by the
labor force. The labor force is calculated by subtracting three things from the population (# under
16, # of institutionalized adults, and # not looking for work). In ... Show more content on
Helpwriting.net ...
So, in this case, it would take fewer dollars to purchase the same amount of Japanese Yen, U.S.
goods become more expensive to Japanese buyers, and Japanese goods become cheaper to U.S.
buyers. A country such as China might choose to peg their currency to the U.S. dollar to keep prices
stable for a key trading partner like the U.S. If the U.S. dollar would appreciate considerably against
most currencies, this would not affect China trade with the U.S., but Chinese goods would become
more expensive to their other trading partners, and could cause Chinese exports to these other
markets to decrease. Points Received: 20 of 20 Comments: 5. Question : (TCO E) Suppose the
Canadian dollar (C$) price of one British pound is C$2.12. A hotel room in London costs 120
pounds, while a similar hotel room in Toronto costs C$250. In which city is the hotel room cheaper,
and by how much? Student Answer: London 120 x C$2.12= $254.40 Toronto is C$250. [254.40–
250]= C$4.40 The Toronto room would be cheaper by C$4.40 Canadian dollars. Instructor
Explanation: Since the exchange rate is 1 pound = C$2.12, we can convert the price of the hotel
room in London to Canadian dollars and then be able to compare. 120 pounds = C$(120 x 2.12) =
C$254.4. Since the hotel room in Toronto costs C$250.00 it must be that the hotel room costs
C$4.40 more in London. Points Received: 15
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61. The Financial Crisis Of 2008
Ever since the economic virus called "negative interest rates" scattered over European and later
Japanese banks, our economic system has been the most unstable since the financial crisis of 2008.
The virus, negative interest rates, is a concept in which the central bank charges interest in
borrowing money and holding an account. It was brought forth in efforts to increase economic
growth by giving commercial banks a tax on the large amount of reserves they hold in the bank. In
other words, commercial banks' negative charge results in the commercial banks having to pay to
keep their money at the central bank.
Numerous economists scratch their heads in confusion, but from the perspective of a developing
economy this technique looks like the best alternative. It brings up the question why set interest
rates negative? Maybe since it encourages foreign investors to favor the domestic currency since it
causes the currency to appreciation. Or since it makes it harder for funding of criminal activities
since one of the common method of transaction will cease to exist. Needless to say, in theory,
negative interest rates are intended to simulate the economy by increasing lending by the banks
requiring them to borrow more money. The reason why several central banks have converted to this
inconvenient method is considering negative interest rates create easy money, causing a short term
economic growth. However, in practice, it seems as a desperate attempt to fix the economy in not
the
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65. Credit Evaluation Model For Banks Using Data Mining...
Credit Evaluation Model for Banks Using Data Mining Techniques
By Sharan Brahmanapally, Bachelor of Technology
A Project submitted in Partial
Fulfillment of the Requirements
For the Degree of
Master of Science
In the field of Industrial Engineering
Advisory Committee:
Dr. Hoo Sang Ko
Graduate School
Southern Illinois University Edwardsville
August, 2015
TABLE OF CONTENTS
TABLE OF CONTENTS ii
LIST OF FIGURES iii
LIST OF TABLES iii
ABSTRACT iv
CHAPTER 1 1
INTRODUCTION 1
1.1 Introduction 1
1.1.1 Decision Process for Credit Evaluation 3
1.2 Problem Statement 4
1.3 Aim of the Project 4
1.4 Objectives of the Project 5
CHAPTER 2 6
LITERATURE REVIEW 6
2.1 Introduction 6
2.2 Theoretical Background 6
2.2.1 Decision Trees 6
2.2.2 ... Show more content on Helpwriting.net ...
It is a process of analyzing the relationship among the data from various perspectives and

66. summarizing it into valuable information. It also assists the banks to look for hidden patterns in a
group and discovers unknown relationships in the data. These data mining techniques facilitate
useful data interpretations for the banking sector to avoid customer attrition. An accurate prediction
on the credit approval is important to prospective homeowners, developers, investors, appraisers, tax
assessors and other real estate market participants without fraudulence. People who are looking to
buy a new place or thing, tend to be more conservative with their budget and acquiring loans from
financial institutions. The credit functionality is prime for any banking system over the tentative
market conditions. The lack of general credit review system & precise methods in banks are the
important reasons, why an expert support system is necessary.
This project aims to evaluate the performance and accuracy of classification models for credit
evaluation. The classification models are developed based on decision trees (J48 & CART), Support
Vector Machine (SVM) and Logistic Regression along with Ensemble Methods. We used a credit
approval dataset from UCI repository to compare the accuracies of the various data mining
techniques. All the developed models achieved more than 85% accuracy, and
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70. Minimum Wage Research Paper
real versus nominal value of wages from 1930–2009. The income value is measured using the
relative average income that would be used to buy a commodity based on the GDP per capita. Labor
Value is measured using the relative wage a worker would use to buy the commodity. This measure
uses one of the wage indexes from MeasuringWorth.com. From the above table, it explains that
one–time minimum wage spike in 1968 does not reflect wage declines in 2017. Rather, the real
value of money today has more purchasing power than it did decades ago. If raising the nominal
value of minimum wage is effective in helping the poor, why should we confine the minimum wage
to only $15? Wouldn't that a $25, a $35, or a $40 be more sound to raise the ... Show more content
on Helpwriting.net ...
It is evident that labor unions are the main driver of minimum wage growth. Their real purpose is to
increase their monopolistic power and collective bargaining by increasing insiders' wages to the
detriment of outsiders, who consequently face fewer job opportunities. Furthermore, the scale
effects of minimum wage are discussed in this paper. Since wages are the main component of
marginal cost, and prices are a markup over marginal cost, higher wage inflation leads to higher
price inflation. Although labor and capital are not perfect substitutes, large–scale automation is
anticipated if labor cost keeps rising above market equilibrium. Besides, research has shown that
one of the main causes of income inequality is the mandate of minimum wage, resulting many
discouraged workers who decided to leave the labor force permanently and subsisted on welfare due
to their obsolete skills. Lastly, one solution to the efficiency of minimum wage could be raising local
minimum wage based on regional CPIs instead of raising minimum wage in all cities in the U.S at
the same time. Another solution could be in making minimum wage hikes in line with marginal
productivity of labor. When output rises due to higher productivity, a higher wage will be
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74. Essay about Macroeconomics Assignment Chapters 1 and 2
MacroEcon 1000 WW Module 1 Assignment 6/10/2014 1. Economics provides a range of choices to
decision makers regarding the outcomes or impacts of alternative courses of action. Describe the
two types of economic analysis (see examples on the bottom of page three). Come up with three
questions of your own as examples for each type of analysis, that relates to you or your community.
Positive Analysis = focuses on facts and statistics, cause and effect, theory development and
inferences made from specific data, consequences of certain actions, etc. Answers the question 'what
is' or 'what will be'. – If the government raises the tax on beer, will it lead to a fall in profits of the
brewers? – How will a reduction in income tax ... Show more content on Helpwriting.net ...
e. Production possibilities curve – a graph that shows the possible combinations of 2 products that
can be produced while fully employing all of its resources. The line is the constraint, if a point lies
inside the line resources are not fully employed, and if its outside the line it is attainable. f. Principle
of diminishing returns – the concept that if you increase a resource, and hold all the other constant,
eventually the marginal product will decline. Example: my Micro professor demonstrated an
example of having one person staple as many pieces of paper in half as they could in a minute, then
he added another person, still one stapler, still one minute, then he continued to add more and more
students while keeping all other variables the same. While the marginal product increased from 1 to
2 to 3 students, it began to decline or diminish as more students were added. g. Real Value– is an
adjusted nominal value, it looks at the value of what a certain amount of money can buy versus it's
face value. h. Human capital – is the resource of knowledge, abilities and experiences of people.
Example: To be an author, you must learn to write, edit, learn the proper grammar and spelling
standards, etc. i. Natural Resources – resources produced with out the help of man (naturally) to be
used for the production of goods and services. Example: oil, water, wood, gas deposits, rock,
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78. bond case mutual of seattle insurance company Essay
Bond Case
Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Insurance Company and
co–directors of the company's pension fund management division. An important new client, The
North–Western Municipal Alliance, has requested that Mutual of Seattle present an investment
seminar to the mayors of the represented cities, and Strother and Tibbs, who will make the actual
presentation, have asked you to help them by answering the following questions.
1) What are the key features of a bond?
2) What are call provisions and sinking fund provisions? Do these provisions make bonds more or
less risky?
3) How does one determine the value of any asset whose value is based on expected future cash
flows?
4) How is the value of a ... Show more content on Helpwriting.net ...
Nominal Yield (Coupon Rate). The interest rate defined on the coupon. This is generally the interest
rate you receive if: you acquired the bond at par (that is, at neither a discount nor a premium to its
par value) there is no call feature on the bond you don't reinvest coupon payments and, you are
resolved to hold the bond until maturity. In reality, it is almost certainly not your actual interest rate.
Current Yield. Factors in the bond's market price, which is generally not the same as par value. Yield
to Maturity. Considers the current market price, the coupon rate and the time to maturity and
assumes that interest payments are reinvested at the bond's coupon rate. This is the most accurate,
and most widely quoted, measure of return on a
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82. Wealth of Nations Summary
AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS by Adam
Smith
(Chapters I–VIII Summary)
Submitted to: Sir Lemuel P. Del Rosario
Submitted by: Rian Karlo Z. Punzalan
Section:2B–G2
CHAPTER I
THE DIVISION OF LABOUR.
When a work is broken down into much smaller work and distributed into individuals that specialize
in that work, we can achieve maximum productivity.
For example the work of making a computer program can be divided up into these assignments. 1.
The main programmer handles the Coding. 2. A debugger scans for errors and bugs within the
program. 3. The designer designs the interface of the program.
By using this example we can show how productivity works, because if all of those tasks will be ...
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Likely a farmer will live nearby, so a person will hire the farmer to do all the work rather than doing
it themselves. This reinforces the ability of the farmers to specialize in their work. Sufficient
business>Sufficient workers>close distance with both parties>People utilizes the Farmers '
specialty in farming.
There are some works that are only available in large cities.
Example, In a big city a construction worker can specialize to a specific work, he only does the
welding of metals, while others do the cutting of metals, carrying the cement bags and etc.
A construction worker in a province would do almost all tasks related to construction – welding,
placing the foundation, roofing, and finishing.
I was able to reconnect this to the computer Game I was playing, Assassin 's Creed. In that game I
own a community where my workers produce Goods like timber, and different animal pelts and
skins and even meat. By means of water–carriage a more wide market is opened to my community
than what land–carriage alone can afford. Throughout history the seacoast cities have developed
much faster than inland cities.
CHAPTER IV
THE ORIGIN AND USE OF MONEY

83. From chapter I–III the division of labor has become established, A cloth maker will not be able to
produce his own food if he is consistently occupied working with his time. Forces him to trade with
the farmer who produces crops and foods for his own and for trade, so the society
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87. Econ-545 Week 6 Quiz Essay example
| 1. | Question: | (TCO F) The size of the labor force in a community is 1,000, and 850 of these folks
are gainfully employed. In this community, 50 people over the age of 16 do not have a job and are
not looking for work. In addition, 80 people in the community are under the age of 16. The
unemployment rate is ______. | | | Student Answer: | | Unemployment rate=unemployed/labor
force*100 150/1000*100=15% 1000–850=150 (number of people unemployed) then divided by
total labor force divided by 100 | | Instructor Explanation: | The unemployment rate is calculated by
dividing the number of unemployed by the labor force. The labor force is calculated by subtracting
three things from the population (# under 16, # of ... Show more content on Helpwriting.net ...
buyers. A country such as China might choose to peg their currency to the U.S. dollar to keep prices
stable for a key trading partner like the U.S. If the U.S. dollar would appreciate considerably against
most currencies, this would not affect China trade with the U.S., but Chinese goods would become
more expensive to their other trading partners, and could cause Chinese exports to these other
markets to decrease. | | | | Points Received: | 17 of 20 | | Comments: | | | | | | | 5. | Question: | (TCO E)
Suppose the Indian rupee price of one British pound is 54.392 rupees for each pound. A hotel room
in London costs 120 pounds, while a similar hotel room in New Delhi costs 6,500 Indian rupees. In
which city is the hotel room cheaper, and by how much? | | | Student Answer: | | London hotel room
120 pound or 6527 rupee (120*54.392) India hotel room 119.50 pounds (6500/54.392) or 6500
rupee the hotel room is cheaper in India for .50 cent in pound or 27 rupees | | Instructor Explanation:
| Since the exchange rate is 1 pound = 54.392 Indian rupees, we can convert the price of the hotel
room in London to Indian rupees and then be able to compare. 120 pounds = rupees(120 x 54.392) =
6,527 rupees. Since the hotel room in New Delhi costs 6,500 rupees, it must be that the hotel room
costs 27 rupees more in London than in New Delhi. | | | | Points Received: | 15 of 15 | | Comments: | |
| |
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91. The General View Regarding The Level Of Stress Amongst
The general view regarding the level of stress amongst leaders assumed that the demands increase
dramatically but the length of day does not change. Since stress results when demands exceed the
resource in this case, time. Therefore leadership is often viewed as highly stressful.
Describe in your own words, two studies conducted on monkeys, with contradicting results
regarding the relationship between leadership and stress. (maximum 8 lines )
The first study regarding rhesus monkeys that were given the ability to control whether they
received electrical shock versus the other group that received random electrical shock. The result of
the study showed that the monkeys that had control over receiving electrical shock developed more
ulcers ... Show more content on Helpwriting.net ...
Is this study related to Basic Research or to Applied Research? Please explain.
The study is basic research because it aims have an improved understanding on whether leaders
have lower or higher stress levels then non leaders.
What is the population on which the research question is focusing?
Participants were from the Boston area and from the excessive education program at Harvard, which
was designed for leaders from the public sector with similar backgrounds. What are the independent
and the dependent variables in the study? (Refer to the theoretical definitions).
The dependent is the salivary cortisol, and anxiety reports. The independent is whether they are
leaders or non leaders.
What are the values/levels of the independent variable in the study?
In the anxiety report the Speilberger test on a scale from 1–4. 1 to also never, 2 sometimes, 3 often,
and 4 almost always. The value of the cortisol was measured for both leader and non leaders and
compared.
What is the operational definition/s of the dependent variable/s?
The first psychological dependent variable is salivary cortisol which is measured for participants
insuring same conditions as well as sampling it at 3:30 and storing it in –25C. The anxiety report
measured on a scale created by the Speilberger grate anxiety inventory.
Choose the correct option in each parentheses and explain your answer – the dependent variable/s
is/are measured on a
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95. A Lecture At The George Washington University
The Chairman's first lecture at The George Washington University highlighted the damage deflation
caused during the Great Depression. The gold standard and errors by monetary policymakers in the
period exacerbated a difficult situation and allowed deflationary forces to spread financial distress
and panic in the banking sector. The Chairman argued that had the Federal Reserve expanded the
money supply during the Great Depression, deflation could have abated and the severity of the
financial crisis would have been avoided. In recent years, deflation has returned to the forefront of
economic discussions as an increasing number of economies have faced the potential of falling
prices.
Deflation is a serious concern of monetary policymakers. ... Show more content on Helpwriting.net
...
The lectures covered the extended period of low interest rates from 2002–2004 and the unorthodox
policies taken during and after the financial crisis, in part to avoid a deflationary spiral.
One of the most consistent defenses against deflation is for a central bank to target an inflation rate
greater than zero. The Federal Reserve's current inflation target is 2% and has informally been at
that rate for quite some time. This nonzero target provides a cushion for policymakers: should
inflation decrease due to an unexpected shock to aggregate demand, prices should not immediately
start falling. This allows policymakers to act with easy money when inflation reaches 1 or 0%, thus
avoiding deflation. Yet, during the last two recessions in the United States, the 2% inflation rate did
not prevent significant fear of deflation. Extraordinary action was required, and many economists
argue that the low interest rate policy following the 2001–2002 recession contributed to the housing
bubble that was inflating at that time. It is not yet known what the impact will be from the
unorthodox policies taken in response to deflation fears in 2009–2010. Based on these experiences,
it may be time to consider alternative inflation targets to provide greater insulation from deflationary
pressures.
Policy Proposal: Increase the
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99. Letter Of Credit : International Trade
Student name:
Institution name:
Course Instructor:
International trade
Letter of Credit (L/C) and a draft
A letter of credit is a written pledge by a buyer's or importer's bank to the exporter or seller's bank.
The letter of credit guarantees payment of a particular sum of money in a specified currency, as long
as the seller meets the specified conditions and presents the set documents within the agreed
timeframe. The prescribed documents include commercial invoice, airway bill and certificate of
origin. To institute a letter of credit favoring the seller, the buyer either makes an upfront payment of
the specified sum or negotiates with the issuing bank.
When the seller or agrees to use the letter of credit, the documents presented (airway bill, invoice
and the certificate of origin) ought to be accompanied by a draft. A draft is an instrument used to
demand payment. The draft is mainly a check representing the claim for payment, also known as the
bill of exchange; it is drawn and signed by the seller (exporter).
What is the major difference between "currency risk" and "risk of non–completion?" How are these
risks handled in a typical international trade transaction?"
Currency risk is the possibility that the currency chosen for payment of the import fluctuates in
value relative to the exchange currency. Take a case where a British firm exporting to France wants
payment in pounds while the Importer (French) wants to make the payment in Euros. If the export
contract
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103. Risk and Return
Chapter 5 Risk and Return 5.1 RATES OF RETURN McGraw–Hill/Irwin © 2004 The McGraw–
Hill Companies, Inc., All Rights Reserved. Learning objectives  Use data on the past
performance of stocks and bonds to characterize the risk and return features of these investments 
Determine the expected return and risk of portfolios that are constructed by combining risky assets
with risk–free investment in Treasury bills  Evaluate the performance of a passive strategy
McGraw–Hill/Irwin © 2004 The McGraw–Hill Companies, Inc., All Rights Reserved. Holding
Period Return  The holding period return (HPR)(보유기간수익률)  Depends on the increase (or
decrease) in the price of the share over the investment period as well as on any ... Show more
content on Helpwriting.net ...
Scenario Analysis and Probability Distributions (시나리오 분석과 확률분포)  How to measure
risk with the HPR  Scenario Analysis  Process of devising a list of possible economic scenarios
and specifying the likelihood of each one, as well as the HPR that will be realized in each case 
i.e.) Boom, Normal growth, Recession State of the Economy Boom Normal growth Recession
Scenario 1 2 3 probability 0.25 0.50 0.25 HPR 44% 14% –16% McGraw–Hill/Irwin © 2004 The
McGraw–Hill Companies, Inc., All Rights Reserved. Scenario Analysis and Probability
Distributions  Probability distributions  The list of possible HPRs with associated probabilities
McGraw–Hill/Irwin © 2004 The McGraw–Hill Companies, Inc., All Rights Reserved. Expected
return (기대수익률) Expected return : The mean value of the distribution of HPR – The sum of
Possible returns with associated probabilities E(r) = S pS(s ) r(s ) E (r )   p( s)r ( s) s t 1 p(s) =
probability of a state r(s) = return if a state occurs 1 to s states It is the average of a probability
distribution of possible returns, calculated by using the following formula: E(R)= Sum: probability
(in scenario i) * the return (in scenario i) McGraw–Hill/Irwin © 2004 The McGraw–Hill
Companies, Inc., All Rights Reserved. Measuring Variance or Dispersion of Returns (분산)
Variance : the expected value of the squared deviation
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107. Can China Avoid Japan's Deflationary Fate?
Can China Avoid Japan's Deflationary Fate?
The International Monetary Fund (IMF) recently highlighted that global recession risks in 2016 had
risen, but attached a zero percent chance that China would experience this fate. A scenario of an
economically contracting China would send deflationary scares spiralling: government bond yields
in advanced markets, particularly safe–haven countries, would collapse and perhaps go negative as
investors switched their focus to real returns. Although China is unlikely to experience negative
growth in the near term, the economy is clearly growing below trend, thereby imparting a
deflationary bias on activity. One possible way to eradicate such forces is to export them by
weakening the yuan. The decision by the Peoples' Bank of China (PBoC) to allow the currency to
weaken in August sent shock waves around global financial markets, because it highlighted the risks
of further escalation in the Great Currency War. Furthermore, the decision to at least contemplate
devaluation to solve deflationary issues was viewed as mimicking the policies of the European
Central Bank (ECB) and the Bank of Japan (BoJ). The latter is an old hand at fighting the
persistence of falling prices, but the fact is that it is still paying a heavy price for failing to contain
the forces that were producing a bubble economy, notably a major expansion of bank lending and
corporate debt issuance. Japan consequently experienced a so–called balance sheet recession that
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111. Key Features of a Bond
A. What are the key features of a bond?
answer: if possible, begin this lecture by showing students an actual bond certificate. We show a real
coupon bond with physical coupons. These can no longer be issued––it is too easy to evade taxes,
especially estate taxes, with bearer bonds. All bonds today must be registered, and registered bonds
don't have physical coupons.
1. Par or face value. We generally assume a $1,000 par value, but par can be anything, and often
$5,000 or more is used. With registered bonds, which is what are issued today, if you bought
$50,000 worth, that amount would appear on the certificate.
2. Coupon rate. The dollar coupon is the "rent" on the money borrowed, which is generally the par
value of the ... Show more content on Helpwriting.net ...
. . 38.55 385.54 1,000.00
Expressed as an equation, we have:
Or:
vb = $100(pvifa10%,10) + $1,000(pvif10%,10) = $100 ((1– 1/(1+.1)10)/0.10) + $1,000
(1/(1+0.10)10).
The bond consists of a 10–year, 10% annuity of $100 per year plus a $1,000 lump sum payment at t
= 10:
pv annuity = $ 614.46 pv maturity value = 385.54 value of bond = $1,000.00
The mathematics of bond valuation is programmed into financial calculators which do the operation
in one step, so the easy way to solve bond valuation problems is with a financial calculator. Input n
= 10, kd = i = 10, pmt = 100, and fv = 1000, and then press pv to find the bond's value, $1,000. Then
change n from 10 to 1 and press pv to get the value of the 1–year bond, which is also $1,000.
K. Suppose a 10–year, 10 percent, semiannual coupon bond with a par value of $1,000 is currently
selling for $1,135.90, producing a nominal yield to maturity of 8 percent. However, the bond can be
called after 5 years for a price of $1,050.

112. K. 1. What is the bond's nominal yield to call (ytc)?
Answer: if the bond were called, bondholders would receive $1,050
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116. Driving Fast Essay
What is Driving Faster US Economic Growth? According to the latest "live" Q4 real GDP growth
forecast courtesy of the Federal Reserve Bank of Atlanta, the US economy is expected to expand
+3.3% during the current quarter. Should this expectation prevail, then the economy will have
enjoyed three successive quarters of GDP growth in excess of 3%, the first occurrence since 2004
H2 and 2005 Q1. The biggest difference between the aforementioned period and the current
environment is the underlying strength of real final sales. Currently, real final sales are averaging
+2.8% over the past three quarters, while this metric was a more robust +3.6% during the 2004 H2
and 2005 Q1 period. What are the driving sources behind the recent faster ... Show more content on
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Meanwhile, the Conference Board's measure of consumer confidence recently reached its highest
level since December 2000, which, incidentally, coincided with the peak of the 1991–2000
economic expansion. Furthermore, much of the improvement is attributable to current conditions
versus the anticipated backdrop six months' hence. Currently, perceptions about abundant job
availability have reached their highest levels since the summer of 2001. Historically, there has been
a close correlation between wage inflation and perceptions of job availability. There is, however, a
disconnection between the two during the current cycle, because wage inflation still appears
reluctant to breach +3%. Despite the apparent lack of upward pressure on nominal wages, consumer
confidence has been rising. This dichotomy is probably explained by the low level of the so–called
misery index (the summation of consumer price inflation and the unemployment rate). Moreover,
real wage gains have been positive due to the persistence of low inflation and this probably explains
why, despite modest nominal wage gains, consumers feel more upbeat. This situation could,
however, change if inflation rises, thereby pushing inflation–adjusted changes in labour
compensation into negative territory. Upbeat US Consumers Appear to Ignore Political Backdrop
The 2016 Presidential Election spectacularly highlighted long and simmering divisions within the
US electorate. Crucially, the election also
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120. International Parity Conditions
"Prices, Interest Rates, and Exchange Rates in Equilibrium" (International Parity Conditions)
Table of Content
Executive Summary 3
1. Introduction .4
2. Literature Review 6
3. Findings and Analysis: 10
a. PPP .. 10
b. FE .. ..12
c. IFE .. .14
4. Conclusion & Recommendations . .. 16
Bibliography .17
Appendix A. Historical Data 18
Table of Figures
Figure 1. International Parity Conditions
Figure 2. Scatter Diagram for PPP
Figure 3. Time–series data for inflation rates differential and exchange rate change
Figure 4. Regression Plot ... Show more content on Helpwriting.net ...
Michael H. Moffet, et al in "Fundamentals of Multinational Finance" say that the PPP is not
particularly helpful in determining what the spot rate is today, but that the relative change in prices
between countries over a period of time determines the change in exchange rates. Moreover, if the
spot rate between 2 countries starts in equilibrium, any change in the differential rate of inflation
between them tends to be offset over the long run by an equal but opposite change in the spot rate.
As for empirical tests, they say that both relative and absolute purchasing power parity show that for
the most part, PPP tends to not be accurate in predicting future exchange rates. Two general
conclusions can be drawn from the tests:
• PPP holds up well over the very long term but is poor for short term estimates
• The theory holds better for countries with relatively high rates of inflation and underdeveloped
capital markets.
Georgios E. Chortareas and Rebecca L. Driver in "PPP and the real exchange rate–real interest rate
differential puzzle revisited: evidence from non–stationary panel data" state that the results show
that there is little direct evidence to support PPP, i.e. the proposition that the real exchange rate is

121. constant, or at least mean–reverting, in the long run. This evidence is obtained by examining the
stationarity of the real exchange rate. The failure to find PPP
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125. Macroeconomics Affecting The Business Environment
CHAPTER 1
QUESTION: IDENTIFY AND EXPLAIN TEN (10) MACROECONOMIC VARIABLES
AFFECTING A NAMED BUSINESS ENVIRONMENT.
HOW CAN THESE BE REGULATED?
INTRODUCTION
In today's world, no business operates in isolation without interacting with the environment where it
operates. Irrespective of the nature of business whether public or private organization;
manufacturing; service industry; local or international firm, its operations are inhibited by the
environment in which it operates.
During 2003–2007, Nigeria attempted to implement an Economic Empowerment Development
Strategy (NEEDS). The purpose of NEEDS is to raise the country's standard of living through a
variety of reforms, including macroeconomic stability, deregulation, ... Show more content on
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✓ Economic Growth
✓ Balance of Payments
✓ Reserves and External Debt
✓ Inflation
✓ Interest and Exchange Rates
Economic Growth
Aggregate Growth Rates. Low or declining aggregate growth rates often weaken the debt–servicing
capacity of domestic borrowers and contribute to increasing credit risk. Recessions have preceded
many episodes of systemic financial distress. Sectoral Slumps. A slump in the sectors where
financial institutions' loans and investments are concentrated could have an immediate impact on
financial system soundness. It deteriorates the quality of financial institutions' portfolios and
profitability margins, and lowers their cash flow and reserves. In transition economies, these
problems may also arise due to lack of progress in the restructuring of state–owned enterprises.

126. Balance of Payments
Current Account Deficit. A rise in the ratio of the current account deficit to GDP is generally
associated with large external capital inflows that are intermediated by the domestic financial system
and could facilitate asset price and credit booms. A large external current account deficit could
signal vulnerability to a currency crisis with negative implications for the liquidity of the financial
system, especially if the deficit is financed by short–term portfolio capital inflows. Financial crises
that have
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130. What Are The Benefits Of Extending The School Year Essay
How would you feel sitting for 8 hours a day twelve months a year having to information
bombarded to you? The two months of summer break that we students currently have are probably
one the most valued and anticipated for every teenager. They see themselves relaxing, going on
vacations, visiting family, and creating great memories during those two months of freedom.
Regrettably this prospect may no longer be available, since the local school board proposes to
change the school year from ten months to year round. They seem persistent on extending the school
year with the argument of expanding educational opportunities. Contrary to what many think
extending the school year will bring about a myriad of problems not just for the students but to the
community. Chiefly it drastically effect the economy, there will be no real educational impact, and
lastly it interfere with any and all plans that student have for their precious summer vacation.
Increasing the school year could have significant lasting economic effects. Logically thinking most
families go on extended vacations during summer break and stay at hotels or resorts. According to
Fox News In the town of Wildwood about 7 million tourists inundate the beaches from June to
September and spend around 555 million dollars oh hotels, foods and entertainment. Nevertheless if
school was extended during this time kids would have to say in school witch would hurt our already
poor economy. Not only would it affect business but if it
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134. Study Guide Essay
HOMEWORK 1 – MONEY AND BANKING * uestion 1 4 out of 4 points Correct The periodic
payments on equity securities are called Answer Selected Answer: dividends. Correct Answer:
dividends. * Question 2 0 out of 4 points Incorrect In the United States, the biggest issuers of debt
securities are Answer Selected Answer: households. Correct Answer: financial intermediaries. *
Question 3 4 out of 4 points Correct In the United States, the biggest issuers of equity securities are
Answer Selected Answer: ... Show more content on Helpwriting.net ...
Which investment provides the highest after–tax return? Investment A: interest rate 10 percent, tax
rate 40 percent of interest income. Investment B: interest rate 8 percent, tax rate 25 percent of
interest income. Investment C: interest rate 6.5 percent, tax rate 0 percent. Answer Selected Answer:
Investments A and B have the same after–tax return, which is greater than that of investment C.
Correct Answer: Investment C. * Question 13 0 out of 4 points Incorrect Consider the following
four debt securities, which are identical in every characteristic except as noted: W: A corporate bond
rated AAA X: A corporate bond rate BBB Y: A corporate bond rated AAA with a shorter time to
maturity than bonds W and X Z: A corporate bond rated AAA with the same time to maturity as
bond Y that trades in a more liquid market than bonds W, X, or Y Which of the following is the most
likely order of the interest rates (yields to maturity) of the bonds from highest to lowest? Answer
Selected Answer: W, X, Z, Y Correct Answer: X, W, Y, Z * Question
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138. Measuring the Cost of Living
Chapter 24
Measuring the Cost of Living
Introduction
1931 – Year of Great Depression in the USA. But in spite of this fact some people contrived to earn
$80 000, it was famous baseball player Babe Ruth. Even the President Herberd Hoover had a lesser
salary of $75 000. When Ruth was asked if he thought it was right that his salary was higher than
President's he replied that he had a better year.
Year of 2007 describes a different picture. The average baseball player gets paid $4.8 million. We
consider the fact that the cost of living, products and services has grown in recent decades. But it
does not give us any explanation if Babe Ruth had a better standard of living than the average
baseball player now, because prices for goods ... Show more content on Helpwriting.net ...
For example one year pizza Margarita costs $10 and pizza Pepperoni costs $12, consumers will buy
more Margarita then Pepperoni. But the next year the price of pizza Margarita rises and Pepperoni's
price falls, in this way consumers will buy chipper pizza. But when computing CPI the number of
goods is fixed and in this way the index will show rise of the cost of living, but in reality the
increase is lower.
Introduction of new goods – since consumer have the variety of goods to buy every dollar becomes
more valuable. In reality introduction of new goods causes a decrease of the cost of living, but CPI
overstates real changes in the cost of living.
Unmeasured quality change – some types of goods and services improve their quality over time,
what increases its price. It is difficult to measure quality of the good or service that is why CPI is
overstated, because economists try to adjust the price to its quality.
The GDP Deflator versus the Consumer Price Index
Two measures of inflation – the GDP Deflator and CPI are usually move together, as it is shown on
the graph (http://www.ritholtz.com/blog/2008/08/variation–on–the–gdpinflation–chart/) below. The
GDP Deflator reflects goods and services produced within the country and CPI reflects goods and
services consumed within a country.
The CPI increases if price of any imported good rises, but it happens vice versa with GDP Deflator.
We can see it on the example of imported oil. When the price of oil raises the
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142. Economic Growth And Its Effect On National Economic System
Ever since negative interest rates scattered over European and later Japanese banks, there has been
many arguments amongst economist about the impacts that it will have to our national economic
system. Negative interest rates are when the central bank of a country charges commercial banks
interest for borrowing money and for some countries, holding an account. In other words, lenders of
the central banks are obligated to pay in order to keep funds safe with the central banks. In theory,
negative interest rates are intended to simulate the economy by increasing lending, ultimately
requiring these secondary banks to borrow more money. It increases economic growth by levying a
tax on the large amount of reserves commercial banks hold. The ... Show more content on
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This time is formally called deflationary periods, a time where homeowners and businesses tend to
keep their money instead of spending it. This is done as an incentive to avoid experiencing what
many individuals and businesses had to deal with during the Great Depression. The result of this is a
collapse in the aggregate demand, causing prices to fall even more due to low real production. Prices
decrease while unemployment increases, further hurting the economy. Even though there are
policies reinforced to help stabilize these moments of economic stagnation (Expansionary Monetary
Policy), if the forces of the deflation are in large numbers, the only way out may ultimately be
abandoning the policies usually followed. The actions of the central banks are to keep inflation
under control and to support economic growth and employment. This is where negative interest rates
come into play.
Picture yourself in this scenario. You're a public bank in the U.S borrowing money from the federal
reserve and lending money out to homeowners throughout the country. Would you lend more money
if you were getting charged more for borrowing than what you were receiving from lending?
Probably not, yet many people would be surprised to know the European central bank has adopted
this method in order to try to protect its currency against others. This is called setting negative
interest rates. As crazy and unwise as it sounds, several of Europe's
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146. Foreign Exchange Market Essay example
econ
___ must choose can exchange rate system to determine how prices in the home country currency
are converted into prices in another country's currency (every country)
A managed floating exchange rate refers to (an exchange rate that is not pegged, but does not float
freely)
A small country with strong economic ties to a larger country should (PEG ((HARD OR SOFT))
THEIR EXCHANGE RATE TO THE LARGER COUNTRY'S CURRENCY)
An increase in the real exchange rate (real depreciation of domestic currency) will result in (AN
INCREASE IN NET EXPORTS)
China has pegged its currency against the U.S. dollar. If demand for dollars decreases (THERE IS
PRESSURE FOR THE U.S. DOLLAR TO DEPRECIATE. IN THIS SETTING, CHINA HAS TO
PURCHASE ... Show more content on Helpwriting.net ...
What is the annual dollar return on this bond (12 percent)
The price of a currency that will be delivered in the future is called (THE FORWARD EXCHANGE
RATE)
Under a Gold Standard (THE EXCHANGE RATE IS FIXED)
Which is true (SOME COUNTRIES PEG TO A BASKET OF CURRENCIES)
Which of the effects is not considered when choosing an exchange rate system (THE FISCAL
((SPENDING)) POLICY THAT THE CHOOSING COUNTRY WILL MAINTAIN)
Which of the following would be interested in holding foreign currency to engage in transactions (a
& d only: a tourist, a manufacturing firm)
Which of the following would be interested in holding foreign currency to take advantage of
investment opportunities (a portfolio manager)
SUPPOSE THE DOLLAR–YEN EXCHANGE RATE IS 0.013 DOLLARS PER YEN. SINCE THE
BASE YEAR, INFLATION HAS BEEN 1 PERCENT IN JAPAN AND 9 PERCENT IN THE
UNITED STATES. WHAT IS THE REAL EXCHANGE RATE (.0120) WORK: REAL
EXCHANGE RATE = (NOMINAL EXCHANGE RATE) X ((FOREIGN PRICES) / (DOMESTIC
PRICES))
THE FOREIGN AND DOMESTIC PRICES ARE FOUND BY TAKING 100 + THE INFLATION
PERCENT.
THEREFORE, THE REAL EXCHANGE RATE = 0.013 X ((101) / (109)) = 0.0120
IN REAL TERMS, THE DOLLAR HAS APPRECIATED AGAINST THE YEN (TRUE)
DUE TO THIS CHANGE, THE U.S. DOLLAR WILL (APPRECIATE), THE CANADIAN
DOLLAR WILL (DEPRECIATE), AND THE LENGTH OF THE EFFECT WILL BE (MEDIUM
RUN)

147. Exports represent about ___ percent of Israel's
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151. Concept Of Gross Domestic Product
Introduction and explanation of structure of paper
The concept of Gross Domestic Product (GDP), is the measured value of the output, which is
currently produced in the domestic economy. This gives a view of the economic wellbeing for the
country, it does not however give a deeper insight into the true wellbeing of the citizens within the
country. This essay will go over the, definition of GDP, Real versus Nominal GDP, Three ways to
calculate GDP, Four components of GDP, types of money transactions not included in GDP and
aspects of the standard of living that not addressed in the calculation of GDP.
Nominal versus Real GDP
Nominal GDP versus Real GDP. Nominal GDP, is the value of final goods and services produced by
and the economy in the ... Show more content on Helpwriting.net ...
Examples of these are personal vehicles and homes. Non–durable goods or consumable goods, are
goods that will be used and then repurchased. This included items such as food, laundry detergent
and toothpaste.
Second is Investment (I), Investment being important because it has to deal with the infrastructure of
a country, state or city the GDP is being calculated for. Investment takes into consideration,
construction this includes residential, commercial and industrial. Another component of investment
is equipment, this is supplemental to construction. The last component of investment is Inventory.
Inventory, this being the amount of goods or services left in reserve and have not been used yet.
Third is Government Spending on goods and services (G), this is culmination of spending by the
government that includes the total expenditures on good and services by the federal government or
state and local government.
Lastly in the calculation of GDP is the Net Exports (X–M), goods and services that are shipped or
sold overseas are exports. Imports are the goods or services that are brought into the country from
overseas. When calculating the Net Exports, the exports for a given year are subtracted by the
Imports for a given year, giving the net exports.
Three types of money transactions not included in GDP Transaction that are not included would be
those sales of used goods, person to person transactions, goods
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155. Econ 1103- Practice Midterm Exam
Economics 1103 080 – Principles of Macroeconomics PRACTICE Midterm Exam Part A: Multiple
Choice (30 marks) Answer the following questions on the scantron sheet. 1. Which of the following
goods best meets the definition of scarcity? a) air b) water in the ocean c) water in a city d) wood in
a forest 2. When the government attempts to cut the economic pie into more equal slices, what
happens? a) It is easier to cut the pie, and therefore the economy can produce a larger pie. b) The
government can more easily allocate the pie to those most in need. c) The pie gets smaller, and there
will be less pie for everyone. d) The economy will spend too much time cutting and loses the ability
to produce enough pie for everyone. ... Show more content on Helpwriting.net ...
Tom works 6 hours a day and Jerry works 8 hours. Tom can produce 6 baskets of goods while Jerry
can produce 7 baskets. Which of the following can we conclude? a) Tom's productivity is greater
than Jerry's. b) Tom's and Jerry's productivities are equal because they both work one day. c) Tom's
and Jerry's productivities cannot be compared. d) Tom's productivity is lower than Jerry's. 17.
According to the traditional view of the production process, how does output per worker change
when capital per worker increases? a) It increases. This increase is larger at larger values of capital
per worker. b) It increases. This increase is smaller at larger values of capital per worker. c) It
increases. This increase is the same at all values of capital per worker. d) It decreases. This decrease
is larger at larger values of capital per worker. e) 18. If the production function for an economy had
constant returns to scale, the labour force doubled, and all other inputs stayed the same, what would
happen to real GDP? a) It would stay the same. b) It would increase by 50 percent. c) It would
increase, but by something less than double. d) It would double. 19. In which of the following types
of investment do foreigners buy shares in domestic companies without actively managing them? a)
foreign direct investment b) foreign portfolio investment c) foreign capital investment d) foreign
indirect
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159. Chapter 5: Introduction to Risk, Return, and the
CHAPTER 5: INTRODUCTION TO RISK, RETURN, AND THE
HISTORICAL RECORD
PROBLEM SETS
1.
The Fisher equation predicts that the nominal rate will equal the equilibrium real rate plus the
expected inflation rate. Hence, if the inflation rate increases from 3% to 5% while there is no change
in the real rate, then the nominal rate will increase by 2%. On the other hand, it is possible that an
increase in the expected inflation rate would be accompanied by a change in the real rate of interest.
While it is conceivable that the nominal interest rate could remain constant as the inflation rate
increased, implying that the real rate decreased as inflation increased, this is not a likely scenario.
2.
If we assume that the distribution ... Show more content on Helpwriting.net ...
Open market purchases of U.S. Treasury securities by the Federal
Reserve Board are equivalent to an increase in the supply of funds (a shift of the supply curve to the
right). The equilibrium real rate of interest will fall.
5–2
6.
The "Inflation–Plus" CD is the safer investment because it guarantees the purchasing power of the
investment. Using the approximation that the real rate equals the nominal rate minus the inflation
rate, the CD provides a real rate of 1.5% regardless of the inflation rate.
b.
The expected return depends on the expected rate of inflation over the next year. If the expected rate
of inflation is less than 3.5% then the conventional CD offers a higher real return than the Inflation–
Plus CD; if the expected rate of inflation is greater than 3.5%, then the opposite is true.
c.

160. If you expect the rate of inflation to be 3% over the next year, then the conventional CD offers you
an expected real rate of return of 2%, which is
0.5% higher than the real rate on the inflation–protected CD. But unless you know that inflation will
be 3% with certainty, the conventional CD is also riskier. The question of which is the better
investment then depends on your attitude towards risk versus return. You might choose to diversify
and invest part of your funds in each.
d.
7.
a.
No. We cannot assume that the entire difference between the risk–free nominal rate (on conventional
CDs) of 5% and the real risk–free rate
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164. Chapter 1 Overview of Financial Management & Environment
CHAPTER 1
Overview of Financial Management & Environment
1–1
Overview of Financial Management
Role of financial management Forms of business organization Goals of the corporation Agency
relationships
1–2
All Successful Firms Accomplish 2 Goals
They identify, create, & deliver products or services that are highly valued
This happens only if the firm provides more value than its competitors (in the form of either lower
prices or better products)
They sell at prices high enough to cover costs and to compensate owners and creditors for their
exposure to risk
The profit must be high enough to adequately 1–3 compensate investors
3 Key Attributes for Success
1. 2.
Skilled People at all levels
Leaders, managers and work force
Strong ... Show more content on Helpwriting.net ...
s's liabilities Their potential losses are limited to their investment This increase the risk faced by an
LLP's lender, customers, and suppliers
1–16
Corporation
Many owners Legal entity created by a state, and it is separate and distinct from its owners and
managers
1–17

165. Corporation
Advantages:
Unlimited life
A corporation can continue after its original owners and managers are deceased
Easy transfer of ownership
Ownership interests can be divided into shares of stock, which can be transferred easily
Limited liability
Losses are limited to the actual funds invested
Ease of raising capital
1–18
Corporation
Disadvantages:
Corporate earnings may be subject to double taxation
The earnings of the corporation are taxed at the corporate level, and then earnings paid out as
dividends are taxed again as income to the stock holders
Cost of set–up and report filing
Setting up a corporation involves preparing a charter, writing a set of bylaws and filling the many
required reports
1–19
Corporation
Charter: Establishing Separate Legal Entity
Name Activities Amount of Capital Stock Number of Directors Names & Addresses of Directors
Bylaws: Rules for conduct of Activities
How Directors will be elected Preemptive Right to new stock issues Procedures for changing
Bylaws, if required
1–20
Goals of the Corporation
The primary goal is shareholder wealth maximization, which translates to maximizing stock price
1–21
Factors that affect stock price
Projected cash flows to
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