econ110 compulsory questions (2 Viewers)

[redruM]

basically, thinking about people sharing answers with each other...it can work anyway you want to.

if you want to, you can just post it up.

or, [what i think is better] swap directly with someone. ie- you give them one they give you another and so on...over msn or something.
this way more sharing is done, rather than 1 actuary posting their answers and all of us just copying that one.

anyways, lets see how this goes.

watch out for leechers i suppose, they take yours and give nothing back

edit: also discussion of questions will be excellent.

 

[redruM]

and here are the questions.

everyon should have them.

 

[flyin']

As an aside, I heard stories about how a bunch of actuaries got caught for plagarism for the assignment. I'm sourcing my long answers elsewhere, to be safe.

 

[redruM]

you can limit by only swapping with a select few [actuaries]

 

[golfstick]

so with these long answers, we answer one in the actual exam

do we get to pick which one or do they tell us which of the 5 we will have to do once we get into the exam? (I'm assuming the latter just because they're bastards )

 

[redruM]

1 out of teh 5 wil be tested. which one? noone will know.....

 

[jlh]

what you actually get the questions before hand?? how unfair!!

the first 4 questions look pretty good. not sure about the last one though, can't remember okun's law...

so you only get 1 long answer question for your final? how long are the answers meant to be?

 

[toknblackguy]

whoa!
are you telling me we definitley know that the finals is gonna be one of those 5 questions??!?!?

 

[scarecrow_of_oz]

we know that an exact form of one of the five will be a long answer question, though its not the whole exam. anyone know the structure?? i mean, is it just multi and a long answer (like a combination of the two tests) or will there be short answers in there too?

 

[AcStyle*]

From the other Econ thread:

Originally posted by flyin'
Part A - 24MC
Part B - 1 Compulsory Question (1 of the 5 given)
Part C - 2 Long Answer Questions, not sure bout how many options.

 

[-=«MÄLÅÇhïtÊ»=-]

ts ts ts
conducting plaigarism in broad cybernet...
u might as well do it in webct where ppl can see ur name...as opposed to this forum where we *cant*

 

[RIZAL]

hmmm seems like there isn't much 'discussion' of the questions going on here. The rules don't say that you can't 'discuss' with other students.

 

[RIZAL]

I think that instead of just posting answers up, a good idea is to establish the basic inital direction of the question, the rest is basically automatic.

e.g. Q2 "A widespread expectation develops in the foreign exchange market that the European central
bank will lower interest rates in Europe.
Explain the effects on the demand for, and supply of, Australian dollars in the foreign
exchange market."

So this means that R^e (expected interest rate) in Europe is lower than the current interest rate in Europe. As such, the demand for European bonds will rise as agents seek to purchase bonds now to realise capital gains in the future.

Funds headed for Australia are now diverted to Europe meaning our domestic Kinflow decreases. Domestic agents who were going to invest in Australian bonds will now buy European bonds, increasing Koutflow. Since Kinflow decreases and Koutflow increases, we have a decrease in the demand for A$ and an increase in the supply of the A$. Then the rest of the question is straight forward.

An alternative way of looking at it, would be that:
European R^e falls.
Therefore Australian R^e rises (relatively)
Therefore agents will seek to sell Australian bonds now to avoid capital losses, with these bonds being replaced by European bonds (Koutflow increases). Overseas agents who were going to purchase Australian bonds realise that they will not receive capital gains in the future and they buy European bonds (Kinflow decreases). Therefore Koutflow increases, Kinflow decrease means that SA$ increases and DA$ decreases.

anyway, that's the response that I'm practicing for this question..any feedback (or spillover haha) would be good?

 

[~ForAGoodCause~]

umm i thought that since interest rates are expected to be lower, agents will look elsewhere for better capital gains. So the demand for australian dollars will increase as Australian interest rates are relatively more attractive. Supply of Aus dollar will decrease, as Aus agents will divert k outflow back into the economy .

?

 

[RIZAL]

Originally posted by ~ForAGoodCause~
umm i thought that since interest rates are expected to be lower, agents will look elsewhere for better capital gains. So the demand for australian dollars will increase as Australian interest rates are relatively more attractive. Supply of Aus dollar will decrease, as Aus agents will divert k outflow back into the economy .

?

since euro interest rates are expected to be lower in the future, the price of euro bonds are expected to be higher in the future and therefore agents will look to Europe for capital gains now.

this is right i'm pretty sure?

 

[flamin']

Originally posted by Isaaq
I think that instead of just posting answers up, a good idea is to establish the basic inital direction of the question, the rest is basically automatic.

e.g. Q2 "A widespread expectation develops in the foreign exchange market that the European central
bank will lower interest rates in Europe.
Explain the effects on the demand for, and supply of, Australian dollars in the foreign
exchange market."

So this means that R^e (expected interest rate) in Europe is lower than the current interest rate in Europe. As such, the demand for European bonds will rise as agents seek to purchase bonds now to realise capital gains in the future.

Funds headed for Australia are now diverted to Europe meaning our domestic Kinflow decreases. Domestic agents who were going to invest in Australian bonds will now buy European bonds, increasing Koutflow. Since Kinflow decreases and Koutflow increases, we have a decrease in the demand for A$ and an increase in the supply of the A$. Then the rest of the question is straight forward.

An alternative way of looking at it, would be that:
European R^e falls.
Therefore Australian R^e rises (relatively)
Therefore agents will seek to sell Australian bonds now to avoid capital losses, with these bonds being replaced by European bonds (Koutflow increases). Overseas agents who were going to purchase Australian bonds realise that they will not receive capital gains in the future and they buy European bonds (Kinflow decreases). Therefore Koutflow increases, Kinflow decrease means that SA$ increases and DA$ decreases.

anyway, that's the response that I'm practicing for this question..any feedback (or spillover haha) would be good?

See text book. Interest rate differentials. I'm not sure if that is correct. You aren't just looking at bonds here. There is an example in the text book.

Rates are expected to be lower in Europe. So who will want to invest in a country that in the future will have lower rates? No one - so no one will give money into Europe for investments - K outflow decreases (from Aust to Europe)

Supply of A$ decreases.

Most of the questions can be answered from the text book.

 

[RIZAL]

Originally posted by flamin'

Rates are expected to be lower in Europe. So who will want to invest in a country that in the future will have lower rates? No one -

?

speculators will want to invest in europe because of capital gains in the short term.

the examples in the text book concern current interest rates and not expected interest rates, which is very different. If we are just looking at current interest rates, then investors simply invest their money in the country with the highest return. If we are looking at expected interest rates, we have to take into account the actions of speculators as well don't we?

Maybe i'm just approaching this question in the wrong way...

edit: wrote something wrong

 

[flamin']

Originally posted by Isaaq
?

speculators will want to invest in europe because of capital gains in the short term.

the examples in the text book concern current interest rates and not expected interest rates, which is very different. If we are just looking at current interest rates, then investors simply invest their money in the country with the highest return. If we are looking at expected interest rates, we have to take into account the actions of speculators as well don't we?

Maybe i'm just approaching this question in the wrong way...

edit: wrote something wrong

yea you sound right... good think i read your approach otherwise i woulda waked in with my half arsed attempt.... =P

 

[-=«MÄLÅÇhïtÊ»=-]

ye i agree with isaac. its an expectation, so it hasnt happened yet. so u try to speculate and get in b4 it actually happens.

foreign exchange and capital in/outflows are dominated by speculation.

 

[Orange Juice]

can someone post up the past papers that the lecturer was speaking about?
i cant seem to find em... thanks