Lecture Notes for FIN 4224 - Fixed Income Securities at Virginia Tech (VT)

Notes Information

Material Type:Class Note
Class:FIN 4224 - Fixed Income Securities
Subject:Finance, Insurance, and Business
University:Virginia Polytechnic Institute And State University
Term:Fall 2008
  • Opportunity
  • Consumption
  • Provided That
  • Combination
  • Individuals
  • (to/for) Him/it
  • Availability
  • Municipal Bonds
  • Production Function
  • Substitution
Login / Sign Up to View Document
Preview Page 1Preview Page 2Preview Page 3Preview Page 4Preview Page 5Preview Page 6

Sample Document Text

The Importance of Borrowing/Lending OpportunitiesThe Hirshleifer-Fisher Model The purpose of this presentation is to demonstrate how the availability of borrowing and lending opportunities increases economic welfare Meaning: Individual have more and better choices when allocating their consumption over time Model is stylized: • Two points of time: Now (t=0) and a year from now (t=1) • Individuals have a money endowment at t=0 (but not at t=1) • Individuals are endowed with a given production function that requires an investment of I0 at t=0 but produces a cash flow of f(I0) at t= 1 • Initially: no borrowing/lending opportunities exist • What are the possible (C0,C1) consumption possibilities 1 Potential production functions: case 1 C1 What is wrong with this picture? C0 Initial Endowment 2 Potential production functions: case 2 C1 What is not-so-OK with this picture? Assumption about the production function: C0 Initial Endowment 3 Potential production functions: case 3 C1 Assumption abou...

Related Documents

Price Stability Notes
Economic Environment Exam
Descriptive Economics Exam
Provided That Exam
Competitive Market Structure Notes
Constructive Choice Exam
Provided That Exam
Current Gains Exam
Provided That Exam
Provided That Exam
Memorial Day Weekend Exam
Mutual Funds Notes
Participating Exam
Descriptive Economics Quiz
Marginal Rate Exam
Reserve Ratio Notes
155, "/var/app/current/tmp/"