1. What is the nominal GDP in 2019?

2. What is the nominal GDP in 2020?

3. Assuming 2019 is the base year, calculate the price index for 2020. ROUNDING UP TO TWO DECIMAL POINTS. For Example, 2.136986 is rounded up to 2.14.

4. What is the real GDP in 2020?

5. What is the real rate of growth of GDP from 2019 to 2020?

6.  Assuming the marginal propensity to consume (MPC) is 0.60 and the equilibrium GDP (Ye) is $5,000, calculate government multiplier. following:

3. A six-month call option is the right to buy stock at $30. Currently, the stock is selling for $32 and the call is selling for $3. You are considering buying 100 shares of the stock ($3,000) or one call option ($300).

a) If the price of the stock rises to $39 within six months, what would be the profits or losses on each position? What would be the percentage gains or losses?

b) If the price of the stock declines to $25 within six months, what would be the profits or losses on each position? What would be the percentage gains or losses?

c)If the price of the stock remained stable at $32, what would be the percentage gains or losses at the expiration of the call option?

d)If you compare purchasing the stock to purchasing the call, why do the percentage gains and losses differ?

Please show work

Assume that there are 50 units of an exhaustible resource that can be used in either period 1 or period 2. The demand curve is given by: P=100-Q. The interest rate is 50%. The industry is perfectly competitive. There are no costs of extraction. a) Solve for the efficient level of output and price in period 1 and period 2 b) Suppose that the government imposes a tax of $30 per unit. Solve for the level of output and price in both period 1 and period 2. c) Suppose that the government imposes a tax of $30 on period 1 sales and $45 on period 2 sales. Solve for the level of output and price in both period 1 and period 2 d) Is the tax described in part (b) or in part (c) more efficient (causes less deadweight loss)? Explain.

Please answer the following 2 questions using the probabilities of different scenarios below.

• What is the expected return and standard deviation of the S&P 500 portfolio and the Bond?

• Suppose AAPL has a beta of 0.8. If the risk-free rate is 3% and the market return is 9%, according to CAPM, the expected return for AAPL is? If the stock price for AAPL is $100 today, according to the expected return you calculate, what is the expected price for AAPL in a year if AAPL is not paying a dividend? What is the expected price if AAPL will pay a dividend of $3?

Wildcat’s stock is volatile, you expect its stock price either increases or decreases by 30% over
a year of time. suppose the current stock price is $100 and you have an American put option
with exercise price of $102. The option has two years to expiration. If the risk-free interest rate
is 10%.
a. What is the risk-neutral probability ππ for the up state?
b. Draw the binomial trees (two years) and mark the stock prices for each of the nodes.
c. For each of the nodes, work backwards and find the value of the option i) if it is kept, ii) if
it is exercised, and iii) the optimal choice.
d. Find the value of the American put option.
e. Is there any state in year one that the option holder would choose to exercise the option
early?

You are the manager of a golf course. A typical member’s inverse demand function for weekly visits (Q) is known to you and is given as P = 100 – 20Q, where P is the fee charged for each visit. Your cost function is C = 20Q.

Required:

i. If you operate your business as a single-price monopolist, what fee you will charge for each visit and what profit you will earn?

ii. Acting as a single-price monopolist (as above), calculate your monopoly power in the market by computing the Lerner’s Index. What is the price elasticity of demand? How much deadweight loss did you cause to society?

iii. If instead, you adopt a two-part pricing strategy, what profit you will make and how will you do your pricing? What will be the deadweight loss now?

A company offers a bond with exactly 100 years to maturity (now 2000 to 2100) and its face value $2,000 that makes coupon payments at the end of each year.

Issue date: 2000; Maturity date: 2100

Coupon rate: 8%

2000 price: $2,000

2005 price: $1500

2010 price: $2,020.5

Q1: What is the interest rate in 2005 in market?

Q2: Sam bought this bond in 2005(yr) right after it made its coupon payment (he did not collect the coupon). Bob bought another bond at the same time with the same coupon rate, issue date and face value but a maturity date of 2015. Bob did not collect the coupon in 2005 either. It is 2010 now, if they were to sell their bonds today who would make more money?

The current price of XYZ stock is $50, and two-month European call options with a strike price of $51 currently sell for $10. As a financial analyst at Merrill Lynch, you are considering two trading strategies regarding stocks and options. Strategy A involves buying 100 shares and Strategy B includes buying 500 call options. Both strategies involve an investment of $5,000.

a. How much is the profit (loss) for strategy A if the stock closes at $65? (sample answer: $100.25 or -$100.25)

b. How much is the profit (loss) for strategy B if the stock closes at $65? (sample answer: $100.25 or -$100.25)

c.How high does the stock price have to rise for strategy B to be more profitable (break-even point)? (sample answer: $100.25)

You are the manager of a golf course. A typical member’s inverse demand function for weekly visits (Q) is known to you and is given as P = 100 – 20Q, where P is the fee charged for each visit. Your cost function is C = 20Q.

i. If you operate your business as a single price monopolist, what fee you will charge for each visit and what profit you will earn?

ii. Acting as a single-price monopolist (as above), calculate your monopoly power in the market by computing the Lerner’s Index. What is the price elasticity of demand? How much deadweight loss you cause to the society?

iii. If instead, you adopt a two-part pricing strategy, what profit you will make and how will you do your pricing? What will be the deadweight loss now?

The market demand function for four-year private universities is given by the equation:  Q^d_pr = 84 - 3.1P_pr + .8I +.9P_pu

Where Q^d_pr is the number of applicants to private universities per year in thousands,P_pr is the average price of private universities (in thousands of USD),  I is the household monthly income (in thousands of USD), and P_pu is the average price of public (government-supported) universities (in thousands of USD). Assume that P_pr is equal to 38, I is equal to 100, and P_pu is equal to 18

a- Compute the price elasticity of demand for private universities

b- Compute the income elasticity for private universities

c- Compute the cross-elasticity of demand for private universities

d- If the two goods are classified as complementary, the cross elasticity between them is

e- What will be the cross elasticity of demand between two goods, if the two goods are classified as substitutes