On May 6, 2010, the US stock market experience what is called
“Flash Crash,” in which DJIA plunged about 1000 points (about 9%)
only to recover those losses within minutes.
Some people say that the crash was due to the high-frequency
traders.
What do you think about the market efficiency in the flash
crash? Is the flash crash evidence against the market
efficiency?
Do you think high frequency traders make the market more
volatile and as a result inefficient?
#19: Lemons and car crashes using the listed lemon/crash
data, find the best predicted crash fatality rate for a year in
which there are 500 metric tons of lemon imports. Is the
predication worthwhile?
Lemon Imports
230
265
358
480
530
Crash Fatality rate
15.9
15.7
15.4
15.3
14.9
19) -In a crash test at five miles per hour, the mean bumper
repair cost for 14 midsize cars was $547 with a standard
deviation of $85. In a similar test of 23 small cars,
the mean bumper repair cost was $347 with a
standard deviation of $185. At a = 0.05, can you
conclude that the mean bumper repair cost is the same for midsize
cars and small cars? a) List the p-value
b) accept or reject.
- Last year the average...
Your client has brought you six (6) notices of assessment for
the years’ 2010 to 2010 indicating substantial income tax
liabilities including penalties. He explains that he has never
filed an income tax return because he had no income. He admits to
you, however, that during the years involved he earned his
livelihood dealing in a prohibited substance although it is illegal
to do so.
Advise him of his position regarding those assessments.
The day after the U.S. stock market crash of October 19, 1987,
Federal Reserve Board Chairman Alan Greenspan issued the following
statement: “The Federal Reserve, consistent with its
responsibilities as the nation’s central bank, affirmed today its
readiness to serve as a source of liquidity to support the economic
and financial system.” What school of thought may prompt
that statement? That is, which school (or schools) has a
role for active monetary policy?