We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Microeconomics - Coursework Example

Comments (0)
Summary
Microeconomics: Risk Premium, Deter Entry to Markets and Externalities Name Institution Microeconomics: Risk Premium, Deter Entry to Markets and Externalities Q1. Risk Premium and Mechanism to Minimize Risks Uncertainty in various outcomes of an event may make one to be a risk averse…
Download full paper
GRAB THE BEST PAPER
Microeconomics
Read TextPreview

Extract of sample
Microeconomics

Download file to see previous pages... Keeping the cash will mean there will be no gain, but one enjoys a high liquidity preference of their cash. However, the future of the market performance is oblique. In the event inflation hit the economy, the money will have greatly lost its value and one would have wished making an earlier investment on either stock or bonds could have been a better option. Investing their money in either stock or bonds is always dilemmatic. An individual is ever sure of safety of money value invested in government bonds than in corporate stock. The value of government bonds depends on the performance of GDP; it could either decrease or increase annually. Assuming a GDP of 7%, the value of the bond that year would be similar to GDP. In such cases, the stock value is always higher than that of bond by 1% or 2%. A person who decided to invest in corporate stock that year will enjoy accrued savings of their investment at either 8% or 9% while one who invested in bonds will only enjoy 7%. The difference of the two becomes the risk premium. Risky situations have a high attached risk premium. There are many mechanisms an individual can explore to minimize risk. To begin with, one can just say no. For example, uncertain luxurious investments to improve one’s status in the society can be avoided. One may have a strong desire to purchase the most coveted natural Cornflower Blue Sapphire.There are two possible outcomes: purchasing a genuine sapphire or duped with a copy. Bearing in mind that one lacks the capacity to distinguish between a genuine and a counterfeit, there are two underlying benefits of varied proportions. If one goes ahead and it is a genuine one, he becomes $ 120 rich otherwise, $10 richer. In such scenario, saying no would avert possible looming risk. Secondly, one can obtain factual information before making a decision. An investor who is interested in a particular corporate stock and lacks information or have scanty facts regarding the stock performance can inquire before putting life savings into it. Information gathered in light of the corporate stock performance in the past few years or quarters may lead one to make informed decisions. A clear indication of a possible decline in the stock value that particular period would deter one from investing because at the end of the day everyone wants to see the value of their assets rising and with great stability. When one obtains information about something whether it has monetary value or not, the decision made will ultimately avert risk associated with it. Thirdly, an individual can diversify the risk. This can be done when the two events are perfectly negatively correlated (Perloff, 2011). A perfectly negatively correlated event according to Perloff refers to an event where one of the two possible outcomes must happen with great certainty. Assuming the government wants to give the tender to either IBM or Apple to supply its various departments with computers and other accessories during the next financial year. There are two possible outcomes: a win and a loss. It is absolutely clear one company must win the tender. When an individual purchase the shares of the winning company, each share value is $50 otherwise $10. One may then decide to purchase an equal share of each company just to be at the fair edge. Assuming a purchase of 5 shares, the total ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Microeconomics Discussion Questions
Whether snowboarding or the National Basketball Association (NBA), the superstars of these sports deliver big revenue streams to their respective advertisers and franchisees. In most cases, it is the efficient market solution because the relative profits realized match or far exceed the salaries of the players.
1 Pages(250 words)Coursework
Microeconomics
One of the primary elements that new firms face is in the real of advertising. Oftentimes, established firms are able to significantly outspend firms that are wishing to enter the market. This provides the established firms with a significant advantage over newly emergent companies and works to differentiate the products to a significant degree.
3 Pages(750 words)Essay
Report on the UK Petrol Market
Report on the UK Petrol Market. The UK petrol market is important and dynamic. Since the publication of the Monopolies and Mergers Commission in 1990, there has been increased competition. The emergence of large supermarkets dealing in petrol has led to the decline of the major non-supermarket dealers such as Esso and Shell.
4 Pages(1000 words)Coursework
Microeconomics
Global communication facilitated by the Internet transmits instant news and information in every part of the world. The young people use the tool as easy access to information and knowledge, as well as communicating with friends through social networking sites.
5 Pages(1250 words)Coursework
Micro economics extra credit
Microeconomics is concerned with the interaction between the individual buyers and the sellers and the factors which impact the choices the sellers and buyers make (OTTERMAN page 1-2). Microeconomics looks at the big picture hence the name micro which focuses on the national economy and there is provision of basic knowledge and how things are conducted in the business world.
3 Pages(750 words)Coursework
Business Proposal
These businesses become competitors, in this case; there have to be strategies and approaches set in order to manage the competition and maintain a market position. The factors that happen beyond the business are referred to as the external factors;
4 Pages(1000 words)Coursework
Microeconomics
This report intends to discuss some of the allegations held against China in matters to with dumping of solar panels. Recently, seven solar panel producers
1 Pages(250 words)Coursework
Discussion
Domestic United States air travel demand decreased from mid-2008 to mid-2009 due to widespread repercussions of the global economic recession. During the period, few U.S citizens
1 Pages(250 words)Coursework
Discussion
Isocost line indicates combinations of all inputs resources whose cost is the same total amount, while an isoquant is a curve, which shows various combinations of capital and labor. The use of the isocost line pertains to minimization of cost
1 Pages(250 words)Coursework
Assess the impact of re-introducing rent control on the market for housing
the population of the city increases, the number of houses also rises as the individuals prefer to build their own houses that in turn contribute to the progress of the nation. However, the future growth of the number of household is expected to be very high due to the
5 Pages(1250 words)Coursework
Let us find you another Coursework on topic Microeconomics for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us