This question is about the Archer Daniels Midland price fixing scandal. Answer the first three parts before watching the video. Read in your book the introduction to the chapter titled “Price fixing and repeated games”. You can use any additional sources to answer the following questions.

a. Write a few lines describing the company Archer Daniels Midland. Where are they located, what kind of products do they sell.

b. What is “price fixing”, why do some countries including the US prohibit it by law?

c. Why is it often hard to detect price fixing? Watch the youtube video clip using this link http://www.youtube.com/watch?v=DPXTsPS-hyw or find it online by searching for “Archer Daniels Midland Segment from Fair Fight in the Marketplace”

d. The price of what product was fixed?

e. Do you think the different firms involved in price fixing were selling products that were relatively homogeneous or differentiated?

f. If price fixing goes undetected, who benefits? Who loses?

g. One of the parties in the video refers to others and friends and enemies. Explain.

h. How was the price fixing behavior detected in this case?

1. During the first four months of 2020 the spot price of crude oil has collapsed, while the price of natural gas has remained relatively stable. In this question I want you to discuss the pattern of prices for natural gas, paying attention to these elements:

a) Describe the nature of the domestic natural gas market in the US: what regulatory features are important, how do you think they influence the market?

1. During the first four months of 2020 the spot price of crude oil has collapsed, while the price of natural gas has remained relatively stable. In this question I want you to discuss the pattern of prices for natural gas, paying attention to these elements:

a) How important is international trade in natural gas, and what considerations influence international trade?

1. During the first four months of 2020 the spot price of crude oil has collapsed, while the price of natural gas has remained relatively stable. In this question I want you to discuss the pattern of prices for natural gas, paying attention to these elements:

a) What effects, if any, do you think the policy response to COVID-19 has had on the demand for and supply of natural gas in the US?

An investment opportunity having a market price of $1,000,000 is available. Your expectation includes these: first-year gross potential income of $300,000; vacancy and collection losses equal to 15 percent of gross potential income; operating expenses equal to 45 percent of effective gross income; and capital expenditures equal to 10 percent of effective gross income. You could obtain a $800,000, 30-year mortgage loan requiring equal monthly payments with interest at 7.5 percent. For the first year only, determine the: a. Net operating income (2.25 pts) b. Effective gross income multiplier (3.25 pts) c. Operating expense ratio (including CAPX) (3.25 pts) d. Monthly and annual payment (3.25 pts) e. Debt coverage ratio (3.25 pts) f. Debt yield ratio (3.25 pts) g. Overall capitalization rate (3.25 pts) h. Equity dividend rate (3.25 pts)

You and your spouse are considering purchasing your first new house. The house price is $300,000. You will make 10% down payment. The remaining balance can be financed with a 30 year mortgage loan with an annual interest of 6%.

A. What is the monthly mortgage payments?

B. How much do you need if you are to pay off the loan after 5 years (right after the 60th payment)?

C. How much interest (in $) will you save from paying the loan off early?

PLEASE USE TVM KEYS FROM FINANCIAL CALCULATOR

Write down the optimal strategies for n participants regarding the following mechanisms:
(a) First price sealed bid auction. (b) Second price sealed bid auction.

You are currently seeking to finance your first house. The price is $400,000. You can make a down payment of $40,000, but you must obtain a mortgage (loan) for the other $360,000. Thanks to a special first time homebuyer’s program, your bank is willing to give you a 30-year, 4.8% APR loan for the amount. Interest on the loan will be compounded monthly.

a) Calculate your monthly payment on the mortgage, assuming that the payments begin one month from the day you purchase the house.

b) You estimate that the largest payments you can afford are $1,250 per month. Calculate the maximum loan you can afford if you are only able to pay $1,250 per month given the information above.

a) Your company is bidding for a service contract in a first-price sealed-bid auction. You value the contract at $12 million. You believe the distribution of bids will be uniform, with a high value of $16 million and a low value of $3 million. What is your optimal strategy with 5 bidders?

b) Your company is bidding for a service contract in a first-price sealed-bid auction. You value the contract at $12 million. You believe the distribution of bids will be uniform, with a high value of $16 million and a low value of $3 million. What is your optimal strategy with 10 bidders?

c). Your company is bidding for a service contract in a first-price sealed-bid auction. You value the contract at $12 million. You believe the distribution of bids will be uniform, with a high value of $16 million and a low value of $3 million. What is your optimal strategy with 20 bidders?

d) Your company is bidding for a service contract in a second-priced sealed bid auction. You value the contract at $12 million. You believe the distribution of bids will be uniform, with a high value of $16 million and a low value of $3 million. What is your optimal strategy with 10 bidders?