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ECON265-Microeconomics > Time-Value Money > Flashcards

Time-Value Money Flashcards

1
Q

Capital Theory

A

The value of an asset is the sum of the future values generated over time

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2
Q

Capital Theory

A

The value of an asset is the sum of the future values generated over time

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3
Q

Value of a bond

A

B = sum(interst) + base

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4
Q

Perpetuity

A

The bond never matures

Geometric series

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5
Q

Finite formula

A

1-a^(n+1)/1-a

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6
Q

Infinite

A

1/(1-a)

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7
Q

Face value

A

Interest/i

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8
Q

price > asset

A

overpriced/overvalued

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9
Q

price

A

underprice/undervalued

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10
Q

Inter-temporal consumer equilibrium equation

A

MU1/p1 = MU2/(P2/i+1)

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11
Q

renewable resource graph shape

A

Convect until a certain point then concave(S - shape)

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12
Q

renewable resource derivative graph shape

A

growth rate = J-shape

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13
Q

renewable resource harvest point?

A

growth rate intersects i

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14
Q

Rate of return vs safety of investment

A

Concave graph(PPC)

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15
Q

Willingness to accept ? willingness to pay

A

> greater then

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16
Q

Sunk Cost

A

Cost that cannot be recovered when a decision is made

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17
Q

u(w) = concave, Risk premium ? 0

A

>

18
Q

u(w) = linear, Risk premium ? 0

A

=

19
Q

u(w) = convect, Risk premium ? 0

A
20
Q

Global risk taker, small $$ and big $$

A

Small $$ - risk averse

Big $$ - risk taker

21
Q

Global risk taker, small $$ and big $$

A

Small $$ - risk averse

Big $$ - risk taker

22
Q

Value of a bond

A

B = sum(interst) + base

23
Q

Perpetuity

A

The bond never matures

Geometric series

24
Q

Finite formula

A

1-a^(n+1)/1-a

25
Q

Infinite

A

1/(1-a)

26
Q

Face value

A

Interest/i

27
Q

price > asset

A

overpriced/overvalued

28
Q

price

A

underprice/undervalued

29
Q

Inter-temporal consumer equilibrium equation

A

MU1/p1 = MU2/(P2/i+1)

30
Q

renewable resource graph shape

A

Convect until a certain point then concave(S - shape)

31
Q

renewable resource derivative graph shape

A

growth rate = J-shape

32
Q

renewable resource harvest point?

A

growth rate intersects i

33
Q

Rate of return vs safety of investment

A

Concave graph(PPC)

34
Q

Willingness to accept ? willingness to pay

A

> greater then

35
Q

Sunk Cost

A

Cost that cannot be recovered when a decision is made

36
Q

u(w) = concave, Risk premium ? 0

A

>

37
Q

u(w) = linear, Risk premium ? 0

A

=

38
Q

u(w) = convect, Risk premium ? 0

A
39
Q

Local risk taker, small $$ and big $$

A

Small $$ - risk taker

Big $$ - risk averse

40
Q

Global risk taker, small $$ and big $$

A

Small $$ - risk averse

Big $$ - risk taker

41
Q

Moral Hazard Problem

A

Unobservable Action

42
Q

dverse Selection Problem

A

Unobservable Characteristics

ECON265-Microeconomics (17 decks)

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