Financial Markets And Decisions at University Of Exeter | Flashcards & Summaries

Suggested languages for you:

# Lernmaterialien für Financial Markets and Decisions an der University of Exeter

Greife auf kostenlose Karteikarten, Zusammenfassungen, Übungsaufgaben und Altklausuren für deinen Financial Markets and Decisions Kurs an der University of Exeter zu.

TESTE DEIN WISSEN

What is the role of banks in the financial markets?

Lösung anzeigen
TESTE DEIN WISSEN
• They facilitate trades between people with different levels of impatience
• Patient people (savers) lend funds to impatient people (borrowers) in exchange for a rate-of-return on the loaned funds.
Lösung ausblenden
TESTE DEIN WISSEN

How do we decide whether to accept a project in terms of NPV?

Lösung anzeigen
TESTE DEIN WISSEN

If NPV is positive --> accept the project

If NPV is negative --> reject the project

Lösung ausblenden
TESTE DEIN WISSEN

When should an asset be sold?

Lösung anzeigen
TESTE DEIN WISSEN

When rate of return = interest rate

Lösung ausblenden
TESTE DEIN WISSEN

What happens to the price of bonds when the interest rate paid by banks rises?

Lösung anzeigen
TESTE DEIN WISSEN

Price of bonds falls

Lösung ausblenden
TESTE DEIN WISSEN

What is a growing annuity?

Lösung anzeigen
TESTE DEIN WISSEN

A growing annuity pays a cashflow A with a constant growth rate g for T periods

Lösung ausblenden
TESTE DEIN WISSEN

What is a growing perpetuity?

Lösung anzeigen
TESTE DEIN WISSEN

A growing perpetuity pays a cashflow A with a constant growth rate g forever

Lösung ausblenden
TESTE DEIN WISSEN

What si the definition of an asset?

Lösung anzeigen
TESTE DEIN WISSEN

A commodity that provides a flow of services over time

Example: house

Lösung ausblenden
TESTE DEIN WISSEN

Intertemporal choice problem: If a consumer does not save or borrow what is their consumption?

Lösung anzeigen
TESTE DEIN WISSEN

c1 = m1

c2 = m2

Consuming at endowment point

Lösung ausblenden
TESTE DEIN WISSEN

What does present-valued mean?

Lösung anzeigen
TESTE DEIN WISSEN

All terms in period 1 values

Lösung ausblenden
TESTE DEIN WISSEN

What is the equilibrium condition in terms of arbitrage?

Lösung anzeigen
TESTE DEIN WISSEN

In Equilibrium there should be no opportunities for arbitrage

Lösung ausblenden
TESTE DEIN WISSEN

What is the effect of inflation on the slope of the budget constraint?

Lösung anzeigen
TESTE DEIN WISSEN

If the inflation rate increases --> slope of the budget constraint is less steep

If the inflation rate decreases --> slope fo the budget constraint more steep

Lösung ausblenden
TESTE DEIN WISSEN

What is a state-contingent contract?

Lösung anzeigen
TESTE DEIN WISSEN

One which is implemented when a particular state of nature occurs

Lösung ausblenden
• 4334 Karteikarten
• 308 Studierende
• 2 Lernmaterialien

## Beispielhafte Karteikarten für deinen Financial Markets and Decisions Kurs an der University of Exeter - von Kommilitonen auf StudySmarter erstellt!

Q:

What is the role of banks in the financial markets?

A:
• They facilitate trades between people with different levels of impatience
• Patient people (savers) lend funds to impatient people (borrowers) in exchange for a rate-of-return on the loaned funds.
Q:

How do we decide whether to accept a project in terms of NPV?

A:

If NPV is positive --> accept the project

If NPV is negative --> reject the project

Q:

When should an asset be sold?

A:

When rate of return = interest rate

Q:

What happens to the price of bonds when the interest rate paid by banks rises?

A:

Price of bonds falls

Q:

What is a growing annuity?

A:

A growing annuity pays a cashflow A with a constant growth rate g for T periods

Q:

What is a growing perpetuity?

A:

A growing perpetuity pays a cashflow A with a constant growth rate g forever

Q:

What si the definition of an asset?

A:

A commodity that provides a flow of services over time

Example: house

Q:

Intertemporal choice problem: If a consumer does not save or borrow what is their consumption?

A:

c1 = m1

c2 = m2

Consuming at endowment point

Q:

What does present-valued mean?

A:

All terms in period 1 values

Q:

What is the equilibrium condition in terms of arbitrage?

A:

In Equilibrium there should be no opportunities for arbitrage

Q:

What is the effect of inflation on the slope of the budget constraint?

A:

If the inflation rate increases --> slope of the budget constraint is less steep

If the inflation rate decreases --> slope fo the budget constraint more steep

Q:

What is a state-contingent contract?

A:

One which is implemented when a particular state of nature occurs

### Erstelle und finde Lernmaterialien auf StudySmarter.

Greife kostenlos auf tausende geteilte Karteikarten, Zusammenfassungen, Altklausuren und mehr zu.

## Das sind die beliebtesten Financial Markets and Decisions Kurse im gesamten StudySmarter Universum

##### Financial Markets

Ateneo de Naga University