Translate the following: If you could be a famous person for one day, who would you choose to be? If you had a million dollars, what would you do? If you could travel anywhere in the world, where would you go? If you were the president, what would you change?
¿Si pudieras ser una persona famosa por un día, a quien elegirías? ¿Si tuvieras un millón de dólares, que harías? ¿Si pudieras viajar a cualquier lugar en el mundo, donde irías? ¿Si fueras presidente, que cambiarías?
Find the IS Curve, the LM curve, and the equilibrium level of the following economy: Y = C + I + G C = 50 + 0.75 (Y - T) I = 150 - 10r (M/P)^d = Y - 50r G = 250 T = 200 M = 3,000 P = 4
IS curve Y = C + I + G Y = 0 + 0.75(Y – T) + (150 – 10r) + 250 Y = 50 + 0.75(Y –200) + (150 –10r) + 250 Y = 300 + 0.75Y – 10r 0.25Y = 300 – 10r Y = 1,200 – 40r LM curve (M/P)^d = M/P Y – 50r = 3,000/4 Y = 750 + 50r IS = LM 1,200 – 40r = 750 + 50r 450 = 90r `5 = r
Explain how a convertible bond is used.
It is a bond with an option to convert into a share. If it is a way in the money, you are looking at its value as a share (this is called “parity”). If it is way out of the money, you are looking at its value as a bond. It is important to view the credit of the issuer to assess credit spread, and of course risk free rates to determine bond value.