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Elements of the decision prob: Decisions to make; Uncertain events; Value of specific outcomes/ Influence Diagrams: graphical representation of uncertain quantities and decisions that explicitly reveals probabilistic dependence and the flow of information/ Arcs: Decision: information flow& the chronological order. Arcsvalue&chance: conditional and show probabilistic dependence between decision elements. A->B: B is conditioned on the value of A/ Sensitivity analysis: relative impact of
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Binary or digital options have a payoff at expiry that is discontinuous in the underlying asset price.
For example, a binary call pays some quantity (for example, 1 euro) at maturity time, if the asset price is then greater than the exercise price K (for example K=100).
Why would you invest in a binary call? Assume you think that the asset price will rise by expiry.
To finish above the strike price then we can choose to buy either a vanilla call or a binary call.
The vanilla call has the best
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The Mercantilists, 1500-1800
make few imports and many exports, thereby generating a net inflow of foreign exchange and maximizing the country’s gold stocks
▪ The world’s wealth was fixed ▪ Gain from trade at the expense of trading partners
Adam Smith: ▪ World’s wealth is not a fixed quantity ▪ All countries can benefit from international trade
Principle of
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§expenses
§Financing rate
·Compare both financing rates and the purchase price offered by dealers
oNegotiating the price
§Some dealers negotiate and some do not
§Sticker price is manufacturer’s suggested retail price (MSRP)
§Negotiating by phone or fax – may be beneficial
§Call several dealers
§Trade-in tactics
·Attempt to negotiate price of new car before mentioning that you have a trade-in
§Value of information
·Info is valuable so shop around
§Purchasing a car online
·Not as efficient as
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FUNCTIONS OF BANKING CAPITAL:
1. increases the credibility in a bank 2)mkes sure the bank has funds bf it starts collecting deposits,3)works as absorber against risks and losses in a business4) K means + growth so capital is a source of growth of a bank5)for regulator it can be a way to control the growth of a bank
WHAT CONSTITUTES BANK CAPITAL
Capital (Net Worth = A – L)
Total Equity Capital is the sum of: 1) Surplus 2)Undivided profits and capital reserves 3)Preferred stock 4)Common stock
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BOP – Records economic transactions between residents of one country with all other countries. Current account – related to income and payment flows. a) Trade in goods (X-M) X – credit M – debit. b) Trade in services (X-M). c) Income from investment. d)Current transfer (no exchange of goods and services). Current account surplus (abcd>0):
Inflow of money from exports revenue from trade in goods and services; income from investment and incoming transfer is larger than outflow of money from import
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