The price of a PiglyWigly share on July 1 was R57. On that day, you bought 100
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Question:
The price of a PiglyWigly share on July 1 was R57. On that day, you bought 100 call options on the share with a strike price of R60 when the option price was R2. The options were exercised when the share price rose to R65.
The net profit you made on this transaction is:
R700 | ||
R500 | ||
R300 | ||
R600 |
Transcribed Image Text:
3. Consider a two person intertemporal exchange economy with preferences for person i={1,2} being u¹(c) and endowments being w; where c₁ = (ci,c₂) and the endowment for person 1 is w₁ = (w1, 0) with w (w1,0) with w > 0, and for person 2, the endowment is w2 = (0,w2) where w2 > 0. Here, the goods are consump- tion "today" and consumption "tomorrow", and there is a single asset b that in equilibrium will pay a rate of return r > 0. Assume both consumers have preferences like in question 2 above, but are in general different preferences. = a. Construct the Edgeworth box carefully for this economy. b. Define the set of socially feasible allocations. c. Define the Contract Curve, and show depict it in the Edgeworth box. d. Define the Pareto Improvement set from any initial allocation wi (W1, W₂) e. Depict a competitive equilibrium in this economy. = 3. Consider a two person intertemporal exchange economy with preferences for person i={1,2} being u¹(c) and endowments being w; where c₁ = (ci,c₂) and the endowment for person 1 is w₁ = (w1, 0) with w (w1,0) with w > 0, and for person 2, the endowment is w2 = (0,w2) where w2 > 0. Here, the goods are consump- tion "today" and consumption "tomorrow", and there is a single asset b that in equilibrium will pay a rate of return r > 0. Assume both consumers have preferences like in question 2 above, but are in general different preferences. = a. Construct the Edgeworth box carefully for this economy. b. Define the set of socially feasible allocations. c. Define the Contract Curve, and show depict it in the Edgeworth box. d. Define the Pareto Improvement set from any initial allocation wi (W1, W₂) e. Depict a competitive equilibrium in this economy. =
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Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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