The demand for gizmos is given by Q=2,000-100P and the supply of gizmos is given by Q=-100 + 200P. There is a $2/unit sales tax on gizmos. Who pays the tax? Who bears the economic burden of the tax? On a supply and demand graph, label the price that buyers pay, the price sellers receive, the tax incidence borne by buyers and sellers, and the deadweight loss associated with the tax.

Cassiopeia inc. is currently trading at $100 per share. After examining the stock of Cassiopeia, you have determined that in each 3 month period its price will either increase to 25% or decrease by 20%. The interest rate is 3% every 3 months. A six month European call option on Cassiopeia has an exercise price of $90. What is the value of this call option?

The price of a zero-coupon bond (ZCB) that matures at time t=10 and that has face value 100 is $61.62

Build an n = 10 binomial model lattice model with the following parameters to compute the price of a forward contract on the same ZCB where the forward contract matures at time t = 4

r_0,0 = 5%

u = 1.1

d = 0.9

q = 1 - q = ½

The price of a zero-coupon bond (ZCB) that matures at time t=10 and that has face value 100 is $61.62

Build an n = 10 binomial model lattice model with the following parameters to compute the price of an American call option on the same ZCB with the expiration t = 6 strike = 80.

r_0,0 = 5%

u = 1.1

d = 0.9

q = 1 - q = ½

The price of a zero-coupon bond (ZCB) that matures at time t=10 and that has face value 100 is $61.62

Build an n = 10 binomial model lattice model with the following parameters to compute the price of a forward contract on the same ZCB where the forward contract matures at time t = 4

r_0,0 = 5%

u = 1.1

d = 0.9

q = 1 - q = ½

The current price of a non-dividend-paying stock is $80. Over the next year it is expected to rise to $92 or fall to $79. Assume the risk free rate is 5%. An investor buys a put option with a strike price of $84. What is the value of the option today? How would the investor hedge the put option position? Assume that the option is written on 100 shares of stock.

You need to set up a network with over 100 workstations. When asking two different vendors, both provided the switches you want, but the price difference is huge. There must be something that makes the price differ that much. But what? What are the consequences if you use a cheaper alternative? What is the threshold of when to use a cheaper switch and when to use the more expensive switch?

Consider the following​ bonds:

What is the percentage change in the price of each bond if its yield to maturity falls from

6.9 % to 5.9 %​?

The price of bond A at 6.9% YTM per $100 face value is ​$? (Round to the nearest​ cent.)

Think of two (less obvious) applications of law of demand. They should NOT be about any purchase/consumption in any specific market.

For example, you can’t say “Apple price falls from $3 to $2 and quantity rises from 100 to 200”. They should be different from the examples in textbook or lecture notes.

Please specify what is the price and what is the quantity demanded.