....................................................................................................................................+7+ Production7production+externality+ ...............................................................................................................+12+ . Polluting+monopolist+and+the+second+best+problem+.....................................................................................+14+ Public+goods+..................................................................................................................................................+21+ Aggregating+the+MWTP+curves+for+a+public+good+..........................................................................................+22+ Aggregated+market+demand+.........................................................................................................................+23+ Aggregating+the+MWTP+curves+for+the+public+good+......................................................................................+24+ Individual+provision+of+a+public+good+............................................................................................................+25+...
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...that the market always prices rationally. In fact, market prices are frequently nonsensical.” ------------------------------------------------- This report will analysis the statement by Warren Buffett, and it considers the contrasting evidence on the validity of the observation on the Efficient Markets Hypothesis. The report briefly outlines the forms of the Efficient Market Hypothesis, the report also analysis’s the evidence both seminal and recent on the theory relating to the three forms of the hypothesis. It also examines the theoretical role and motivation of analysts in creating market efficiency; lastly it looks at alternative perspectives on the pricing of securities. Introduction In 1984 Warren Buffett penned an article titled “The Superinvestors of Graham-and-Doddsville”, based on a speech he had given on the occasion of the 50th anniversary of his mentor Ben Graham’s legendary textbook, Security Analysis. In it, Buffett rejected the then growing (and now entrenched) view in academia that markets are ''efficient'' because ''stock prices reflect everything that is known about a company’s prospects and about the state of the economy.'' Warren Buffett argued against EMH, saying the preponderance of value investors among the world's best money managers rebuts the claim of EMH proponents that luck is the reason some investors appear more successful than others. (Hoffman, 2010) This report will either agree with Buffet or somewhat sit on the fence. A market is said...
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...QUT | Case Study 4: Market Efficiency | Bill Miller and Value Trust | | Name: Huey Ngu Student ID: 08324093Tutor Name: David FairDate: 1 November 2013 | Words: 1097 | Contents Introduction 2 Past and current performance of Value Trust 2 Investment strategy of Bill Miller 3 Efficient Market Hypothesis 3 Bill Miller’s letter to shareholders 4 Changes in Chief Investment Officer (CIO) 4 Recommendation and Conclusion 4 Reference 6 Appendices 8 Appendix A: Data of LMVTX, S&P 500, and 30 years bond 8 Appendix B: Alpha and Beta between 1991 and 2013 9 Appendix C: Alpha and Beta between 1991 and 2005 9 Appendix D: Alpha and Beta between 2006 and 2013 9 Introduction Bill Miller is known as famous fund manager that hold the record of beating benchmark index for 15 years in a row. However, his poor performance after 2005 was the reason that the investors run away from his fund. Hence, arguments of whether Bill Miller’s previous performances involve luck or skills appear. Furthermore, this report will also discuss whether investors should invest in Bill Miller’s Value Trust. Past and current performance of Value Trust Figure [ 1 ]: LMVTX VS S&P500 (Morningstar Principia , 2013) Bill Miller had made an achievement of longest streak performance of beating the market. Refer to figure 1, it had showed that Bill Miller’s Value Trust had consistently beat the benchmark index of Standard & Poor’s 500 (S&P 500) between 1991 and...
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...Philips vs. Matsushita Case Greg Tensa 1. How did Philips become the leading consumer electronics company in the world post war era? What distinctive competencies did they build? What incompetancies did they build? Prior to World War II, Philips had created a culture of embracing technical innovation. On the production side, Philips was a leader in industrial research, and scrapped old plants in favor of new machines or factories whenever advances were made. On the product side, strong research enabled the company to broaden its product line, starting with light bulbs but growing into vacuum tubes, radios and X-ray tubes by the 1930s. Because Holland was such a small country, Philips was forced to start exporting in the early 1900s in order to have enough sales volume for its mass-production facilities. Philips evolved into a highly centralized company with decentralized sales and autonomous marketing in 17 countries. Political events in the world during the 1930s forced Philips to change into a truly multi-national company. First, the depression caused countries to erect trade barriers and enact high tariffs, forcing Philips to build local production facilities in the foreign markets they served. Second, in anticipation of World War II, Philips transferred its overseas assets into trusts in Great Britain and the U.S. They moved the bulk of their research staffs to England, and their top managers to the United States. With these assets, the national organizations (NOs) became...
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...reduction in benefits associated with higher earning affect people incentive to work past age 65? When the benefites are reduced (like an increase in the age you can start collecting ... or a decrease in the inflation adjustment) then the dependants of SS will find they do not have enough money to pay their bills. This will entice many to find employment to compensate for what they cannot purchase (medicines, rent, food, etc. 8) a concern about equality or a concern about efficiency in the case of efficiency discuss about efficiency in the case of efficiency a. This shows the government's concern about efficiency. The market failure involved is due to market power where small group of persons or a single person influences market prices. b. This shows the government's concern about equality. c. This shows the government's concern about efficiency. The market failure involved is known as an...
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...Mac’s, IPhones, IPod’s, but has redefined his product-service business in the arena of the Genius Bar and Apple Care. Its been a huge success for its customers and its profits margins as consumers consider physical goods knowing the services are bundled in. 2. Some people tend to use the terms effectiveness and efficiency interchangeably, though we’ve seen they are different concepts. But is there any relationship at all between them? Can a firm be effective but inefficient? Very efficient but essentially ineffective? Both? Neither? Pg 14 Efficiency: Doing something at the lowest possible cost. Effectiveness: Doing the things that will create the most value for the customer. Value: The attractiveness of a product relative to its price. It is possible for a firm to be very effective at what they do in serving their market, but be very wasteful (poor efficiency) in doing so. Alternatively, a firm could operate efficient but fail to effectively deliver a product or service that the market expects and desires. High preforming firms...
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...You are expecting IBM stock price to go up in next 8 months, however you are not completely sure. So you decide to use just one option, either European call or European put on IBM stock maturing in 8 months to bet on your view about IBM’s stock price prospects. Suppose that the current stock price and the strike price for both call and put on the IBM stock is $50. (a) What option will you invest in? Explain. Call. Call price will go up if the stock price goes up. The losses are limited by the option premium paid. (b) At what price will you breakeven if both put and call options are sold for the same premium of $5 Breakeven stock price $50+$5 = $55 (c) Assume that the risk free rate is 3% per annum. Also assume that the standard deviation of IBM’s stock return is 30% per year. What is the Black-Scholes value of the option you have identified in part a? Step 1: find d1 and d2 d_1=(ln(50/50)+(0.03+〖0.30〗^2/2)×8/12)/(0.30×√(8/12))=0.2041 d_2=0.2041-0.30×√(8/12)=-0.0408 Step 2: find N(d1) and N(d2) Using the cumulative normal table obtain N(d1) = N(0.20) = 0.5793 and N(d2) = N(-0.04) = 0.4841 Step 3: calculate the call option value c=$50×0.5793-$50×e^(-0.03×(8/12) )×0.4841=$5.2393 (d) What is the time value of the option you have identified in part a? Because the stock price equals the strike price ($50) the total value of the option would consist of time value only, therefore the time value of this option is $5.2393 Problem 2 You anticipate that the volatility...
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...is higher than the producer’s Marginal Cost (competitive Supply). • The competitive equilibrium will produce more than the optimal quantity for Society. • If there is an external cost to consumption, the Marginal Social Value is less than Demand. 4 Positive Externalities • If there is an external benefit from consumption, the Marginal Social Benefit is higher than consumer Demand. • The competitive equilibrium will produce less than the optimal quantity for Society. • If there is an external benefit to production, the Marginal Social Cost is less than Supply. 2 5 Externalities • Negative Production Externality: MSC higher than Supply, market leads to too much Q. • Negative Consumption Externality: MSB lower than Demand, market leads to too much Q. • Positive Production Externality: MSC lower than Supply, market leads to too little Q. • Positive Consumption Externality: MSB...
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...SUSTAINABLE MARKETING 1-Review-Q4 What are the core components of the modern mainstream marketing? • The marketing philosophy: based on the idea of meeting the needs and wants of a customer is the rule that businesses should be organized to be successful and profitable in the markets. • The marketing environment: marketing should be function in business that is focused outward, responding to the changes in the environment. • Marketing research: mapping customers and their wants and the marketing decisions are based on this info. • Market segmentation and targeting: define significant differences among customer groups, based on market research. Adjust strategies and marketing outcomes accordingly. • The marketing mix: 4P,s and other variables to be adjusted to the customer’s needs, to gain competitive advantage. • Competitive advantage: understand consumers and marketing environment, and unique capabilities of company might reveal a competitive advantage. • The marketing planning and management process,: marketing success is an outcome of systematic marketing activities and decisions. 2-Review-Q5 Define corporate responsibility (CSR)- What is the link between CSR and sustainability marketing? GREEN PAPER DEFINITION for CSR CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with stakeholders on voluntary basis. I would define it: CSR is when companies...
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...Global Management Session 1: Globalization and You as a Global Manager The session becan by showing a short video called ‘Did you know’ The video briefly pointed out how globalisation has reshaped the world in terms of social, economic, environmental and technological aspects. One of the key idea that the video clip demonstrated is that the economy in emerging markets will overtake the economy in developed countries by 2020 for the first time in human history. Fundamental concepts of the session- What is globalisation, how it has evolved and affected our lifestyles, the globalisation of markets and production Example of Starbucks and Boeing- How did these two firms take the opportunity of globalisation to way they used to operate, and expand in both their home country and overseas . The global economic activities are shifting towards emerging markets, e.g The BRICS Why and how big data will play an essential role in the aspects of business competition and managing a multinational company. Even though global companies account for the world/s ¼ GDP, ½ of these companies ‘profits are still generated from their home coutries, big question is, has globalisation made the world flat and removed the barriers to do business in the globe or do differences still exist across different countries. CAGE Framework- Cultural differences, Administrative differences, Geographic attributes, Economic distance Some examples of the frame work: 1. Cultural differences...
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...How do the two main economic development strategies relate to economic growth/ development strategies and based on that discussion, what is actual today with regard to economic development? Development Economics Arman Poghosyan Yerevan, 2011 Growth and development are usually discussed in the same context while the goals of each are very different. Growth is mainly the process of expanding the size of community through the use of natural resources, economic resources and land. While development, on the other hand, is the process of improving living standards of community. Growth is critical for any community, but it doesn’t necessarily lead to development. Though usually there is no development without growth. One way to develop without growing is through two main economic development strategies, which are import substitution strategy and export promotion strategy. These two strategies were used by many countries to develop their economy. The choice between these two competing strategies is often difficult and subject of discussion of policy makers. And this choice often can be crucial. Import substitution strategy promotes domestic industry by substituting externally produced goods and services. Generally, countries applying import substitution strategies start with producing goods that don’t need an advanced technology. These goods usually are basic necessities such as food, water and energy. This strategy...
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...Difference in return, 20%-10%= Risk Premium Risk in Portfolio Context Expected return on portfolio=Weighted expected return=rp=i=1nwiri Portfolio Risk Stocks can be combined into portfolios which then become less risky to riskless depending on the correlation of the assets. Stocks with a ρ=-1 are perfectly negatively correlated. The inverse is positively correlated. Expected ρ also called R = t=1n(ri,t-ri,Avg)(rj,t-rj,Avg)[t=1n(ri,t-ri,Avg)2][t=1n(rj,t-rj,Avg)2] Where i and j are stocks ri,t is the actual return for stock i in period t and ri,Avgis average return during n period sample Or just use =CORREL function in Excel Diversification does NOTHING to reduce risk if stocks are perfectly positive correlated!!! Diversifiable Risk VS Market Risk Almost...
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...Problem Scarcity: lack of enough resources to satisfy all desired uses of those resources. Three Core Issues What to produce with our limited resources How to produce the goods and services For whom goods and services are produced Factors or Production 1. 2. 3. Land labor Capital Entrepreneurship Goods produced for use in further production The assembling of resources to produce new or improved products and technologies All natural resources Skills and abilities of all humans at work 4. Land The entire material universe exclusive of people and their products. Capital Capital – goods produced for use in further production. • Future investment • Depreciate • More efficient technology Capital Money Quiz Labor Entrepreneurship Capital Land Economics Defined Economics: the study of how best to allocate scarce resources among competing uses. Trade Off A situation that involves losing one quality or aspect of something in return for gaining another quality or aspect. Trade Off When we choose to use resources to produce one thing, we must give up producing something else with those resources. This trade-off comes with a cost. Think-Pair-Share Time Opportunity Cost Opportunity cost: the...
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...rights reserved 0047-2506 www.jibs.net Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets Jean-Francois Hennart ¸ CentER and Department of Organization and Strategy, Tilburg University, The Netherlands Correspondence: J-F Hennart, Professor of International Management, CentER and Department of Organization and Strategy, Tilburg University, PO Box 90153, 5000 LE Tilburg, The Netherlands. Tel: þ 31 13 466 2315; Fax: þ 31 13 466 8354; E-mail: j.f.hennart@uvt.nl Abstract Both Anderson and Gatignon and the Uppsala internationalization model see the initial mode of foreign market entry and subsequent modes of operation as unilaterally determined by multinational enterprises (MNEs) arbitraging control and risk and increasing their commitment as they gain experience in the target market. OLI and internalization models do recognize that foreign market entry requires the bundling of MNE and complementary local assets, which they call location or country-specific advantages, but implicitly assume that those assets are freely accessible to MNEs. In contrast to both of these MNE-centric views, I explicitly consider the transactional characteristics of complementary local assets and model foreign market entry as the optimal assignment of equity between their owners and MNEs. By looking at the relative efficiency of the different markets in which MNE and complementary local assets are traded, and at how these...
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...Professor Pecquet Economics 201 Study Guide for Exam 1 Exam 1 covers Lectures 1-5 & Gwartney and Stroup chapters 1-5. Format: 40-55 multiple choice questions. You may also have some additional material from Monday’s lecture. Study advice: Try to prepare for the exam in advance in order to get enough sleep the night before. Get plenty rest the night before. This will help you to read the questions carefully. I estimate about 5% of the misses are due to careless reading. Study your assigned homework problems and blackboard quizzes. Use the handout that I prepared for you: Arbitrage & Speculation. Lecture 1 The Economic Approach Related Readings Chapter 1 Define Economics in two ways and understand the difference between each way. Know the meaning and relationship between the following concepts covered in the first lecture: scarcity, rationing/rules, competition and choice. Know especially the concept of opportunity cost and choice. Be able to work opportunity cost problems similar to cost of college and the alternative ways of travel problems that we did in class and on homework. Know the difference between normative and positive. Know the difference between positive sum games, zero sum games and negative sum games as discussed in the lecture. Economists use incentives to set up positive win-win games as in my classroom examples of Australia & golden content in trash. What is meant by the moral hazard problem? Understand...
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