In terms of key features of microeconomic principles, answer the following
1. In terms of key features of microeconomic principles, answer the following
a) What is scarcity of resources? How the scarcity of resources relates to financial services industry products?
b) What is law of demand and low of supply?
c) What does market equilibrium mean? How the equilibrium concept relates to financial services industry organisational practices?
d) Why does consumer’s price elasticity of demand for a good depends on the fraction of the consumer’s income spent on that good? What is the relation of this concept to financial services industry services?
e) What is the difference between a monopolistically competitive market and a perfectly competitive market? Which market form is significant at financial market services industry?
2. In terms of asset pricing models, answer the following:
a) What is the security market line and how does it differ from the capital market line?
b) What does it have to do with the Capital Asset Pricing Model (CAPM)?
c) If a security is plotted above the security market line is it over-priced or under- priced? Explain what might happen is this situation.
d) How the CAPM use to identify organisational value and capital structures?
3. In terms of Portfolio Theory, answer the following:
a) What is the efficient frontier?
b) What are the two points that connect the capital market line?
c) What does the slope of the capital market line indicate?
d) Avoidable and unavoidable are common terms for investor risk. By what names do we also know these risks and which belongs to which?
5. In terms of financial markets, products and service in Australia, answer the following with examples:
b) Commercial Bills and promissory notes
a) Unfunded loan commitments
b) Letter of Credit
c) Yield curves