ECO2071
Assignment 1 Financial Concepts
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Assignment 1: Financial Concepts
Your niece just started her college
career with a major in economics. She is curious as to the interrelationship
between the success of an economy and the financial markets, concepts, and
financial institutions. Accordingly, she has developed a list of questions
addressing these issues and has asked that you explain the ideas.
• What
are the financial markets and what purposes do they serve?
• What
are financial intermediaries? How do these intermediaries function in the
economy?
• What
is a federal government budget deficit? What is the national debt? How does a
budget deficit affect the economy?
She is also curious about the time
value of money concepts. Specifically, she has the following questions about
these concepts:
• Why
are consumers considered to be risk averse? What methods could used to deal
with risk?
• It
has been said that a dollar received today is worth more than a dollar received
tomorrow. What does this mean and what is the significance to the economy?
• What
is the difference between the present value of a future sum of money and the
future value of a present sum of money? What is the significance of these
concepts to economics?
• If
you deposited $1,000 in an account paying 6% interest compounded annually, how
long would it take to double?
Deliverables:
• Submit
an 3-6 page paper in Microsoft Word format, .
•
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