•Using the Supply and Demand Model
•Starting from a point of equilibrium demonstrate and explain the effect on Price and Quantity Use the 5 step process from class •A. Government wishes to create a minimum wage by creating a minimum wage of $10.00 when the market for unskilled labor is $5.00 •B. Government wants to solve affordable housing by making the maximum rent $2,000 for an apartment in NYC, when the market rent is $3,500 •Has the principle of the government can sometimes make the market better off been realized with these two policies?
•How can the Government increase market wages and decrease market rents without harm to the market?
The current Dollar-Pound exchange rate is 1.60 dollars perBritish Pound. The U.S. and British risk-free interest rates(annualized, continuously compounded) are 5% and 7.5%,respectively. Answer the following questions.
A. What is the no arbitrage forward price of the British Poundfor a 6-month forward contract?
B. Suppose the actual forward price is 1.65 dollars per BritishPound. Illustrate the arbitrage opportunity. . . .