Financial Economic

Financial Economic

You may use your notes, the text, the internet, or any other resources other than your classmates. Be sure to cite your sources

Choose four (4) of the five questions listed below.

In answering the 4 questions you’ve selected, you may submit a maximum of 5 single-spaced, typed pages. Font size should be no smaller than 11. (You are certainly not

required to submit 5 pages.)

1. Imagine it is 2117 and Earth’s settlement on Mars has swelled to 5 million people. Everyone agrees it is time for Mars to have its own money, and you’re on the

committee charged with designing a new monetary system. Given that you have a blank slate, what are your recommendations? Would there be one monopoly money or

several competing currencies? Would you suggest a commodity-based money or fiat currency? Would the money be supplied by the Martian government or issued by private

sector entities? In each case, explain your answers and feel free to include in your discussion any other characteristics or considerations you feel would be important

in designing a new 22ndcentury money.

2. We spent some time discussing India’s recent demonetization efforts, but India is not the only government becoming increasingly outspoken about the desire to remove

circulating currency (cash) from their economies. Around the globe, many governments would like to see (force?) their citizens to move entirely to digital payments.

Identify the primary advantages and disadvantages of demonetization. Who is likely to win? Who is likely to lose? Explain. Use India as a case study, but feel free to

extend your discussion beyond what we learned that is specific to India.

3. In the second set of slides (Weeks 3-4) is a slide headed “Financial Architecture.” The slide identifies “hardware” and “software” necessary to a well-functioning

financial sector. Use our discussions through the first six (6) weeks of the semester to identify and illustrate the importance of components listed on the table.

(Note that you will not be expected to discuss all of the hardware or software elements. Choose those you see as most important in our discussions so far.)

4. In the second set of slides (Weeks 3-4) is a slide that identifies three finance lessons included in Shakespeare’s Merchant of Venice. Identify a component of

financial markets anywhere in the world that seem to illustrate the lessons identified in the slide. Explain how the example you’ve chosen illustrates Shakespeare’s


5. A major goal of the class is to explore how the presence of financial markets supports economic growth and development. That said, there are many individuals and

groups who criticize the “one percent” who live primarily off the proceeds of their investments. Nor is this criticism new. Individuals who rely on coupon payments

from bonds as their primary means of support have long been attacked by those who view them as “unproductive” members of society. Imagine that we could remove these

individuals from the U.S. economy – either by taxing interest income at 100 percent (i.e., taking it all) or by outlawing the bonds from which the coupon payments are

made. Describe the long-term economic consequences of such a change. Would the U.S. be better off if we could rid ourselves of those individuals who live off of coupon

payments? Justify your answers.

BONUS questions (worth 3 points each)
6. Friends of yours have asked that you help fund their new business venture. They promise that you will receive $5,000 at the end of each year for the next 10 years.

Given the nature of their business proposal and your opportunity costs, you’d be willing to invest if you could expect to earn an 8 percent return. How much would

you be willing to invest in your friends’ firm?

7. Your friends (from question 6) would really like you to invest $50,000 in their company. You still want an 8 percent return, and you want to be repaid with annual

payments over the next 10 years. How much will your friends need to pay you each year for you to be willing to consider the investment?

8. A 30-year bond with a face value of $1,000 and a 5 percent coupon payment was issued in 2010. Since the bond was issued, interest rates have risen to 7 percent on

comparable bonds. What is the bond selling for today?


Geometry Tangents to Circles

AD←→ is tangent to circle M at point D. The measure of∠DMQ is 50º.

What is the measure of ∠DQM? (I will attach files of the problem, this one will be called Capture 1.)

What is the value of n?

Enter your answer in the box. (I will attach files of the problem, this one will be called capture2.)

What is the value of n?

Enter your answer in the box. (I will attach files of the problem, this one will be called capture3.)

Which statement about BC←→ is correct? (I will attach files of the problem, this one will be called capture4.)

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