Dr. P.V. Viswanath

 

pviswanath@pace.edu

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  Courses / Chico  
 
 
 

Assignments, Spring 2011

 
 

Connect Problem assignments from: Investments -- Bodie, Kane and Marcus, 9th edition.

 
 

Financial Markets and Institutions

As explained in the slides, financial functions can be broadly divided into six categories:

  • To transfer economic resources across time, borders and among industries
  • To provide ways of managing risk
  • To provide ways of clearing and settling payments to facilitate trade
  • To provide a mechanism for the pooling of resources and for the subdividing of ownership in various enterprises
  • To provide price information to help coordinate decentralized decision making in various sectors of the economy
  • To provide ways of dealing with the incentive problems created when one party to a transaction has information that the other party does not or when one party acts as an agent for another

Choose a specific financial intermediary (e.g. Bank of America or Visa or FICO (formerly Fair Isaac Corporation)) and write two paragraphs explaining what financial function it performs and how.

 

Betas

The Groupon company is discussed in the NY Times of Nov. 23, 2010. (http://boss.blogs.nytimes.com/2010/11/23/doing-the-math-on-a-groupon-deal/?ref=business).
In class, we noted that a stock's beta measures its sensitivity to market movements. We also spoke about the relationship between the nature of the product sold by a company, especially its price elasticity and its beta.
What would the beta of the Groupon company be, if it were traded on the stock market as a separate company?