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Flashcard 1430720482572

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-2-consumer-theory-from-preferences-to-demand-function #study-session-4-microeconomics-analysis
Question
in Consumer choice theory, consumers must purchase them at [...] and with a [...]
Answer
given market prices

limited income.

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Consumer choice theory recognizes that to consume a set of goods and services, consumers must purchase them at given market prices and with a limited income.

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2. CONSUMER THEORY: FROM PREFERENCES TO DEMAND FUNCTIONS
oice theory begins with a fundamental model of how consumer preferences and tastes might be represented. It explores consumers’ willingness to trade off between two goods (or two baskets of goods), both of which the consumer finds beneficial. <span>Consumer choice theory then recognizes that to consume a set of goods and services, consumers must purchase them at given market prices and with a limited income. In effect, consumer choice theory first models what the consumer would like to consume, and then it examines what the consumer can consume with limited income. Finally, by superimposing







Flashcard 1432277880076

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Question
Helen Smith and Tom Warren have identical baskets containing books (B) and compact discs (D). Smith’s MRSBD equals 0.8 (i.e., she is willing to give up 0.8 disc for 1 book), and Warren’s MRSBD equals 1.25.

Determine whether Smith or Warren would end up with more discs than he/she had to begin with, assuming they were allowed to exchange at the rate of 1 book for 1 disc. Justify your answer.
Answer
Smith would have more discs than she originally had. Because Smith has a relatively stronger preference for discs and Warren has a relatively stronger preference for books, Smith would trade books for discs and so would end up with more discs.

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Helen Smith and Tom Warren have identical baskets containing books (B) and compact discs (D). Smith’s MRS BD equals 0.8 (i.e., she is willing to give up 0.8 disc for 1 book), and Warren’s MRS BD equals 1.25. Determine whether Warren would accept the trade of 1 of Smith’s discs in exchange for 1 of his books.

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3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
trade one good for the other that made trading beneficial to both. But if they trade to a pair of bundles at which their MRSs are equal, then trading will cease. EXAMPLE 3 Understanding Voluntary Exchange <span>Helen Smith and Tom Warren have identical baskets containing books (B) and compact discs (D). Smith’s MRS BD equals 0.8 (i.e., she is willing to give up 0.8 disc for 1 book), and Warren’s MRS BD equals 1.25. Determine whether Warren would accept the trade of 1 of Smith’s discs in exchange for 1 of his books. State and justify whether Smith or Warren has a relatively stronger preference for books. Determine whether Smith or Warren would end up with more discs







Flashcard 1438553607436

Tags
#analyst-notes #cfa-level-1 #corporate-finance #introduction #reading-35-capital-budgeting
Question
In monitoring and post-auditing decision-makers compare [...] with [...] and then determining why differences occurred.

Answer
actual results

predicted results

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he post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: <span>Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span><body><html>

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Subject 1. Capital Budgeting: Introduction
include in the capital budget. "Capital" refers to long-term assets. The "budget" is a plan which details projected cash inflows and outflows during a future period. <span>The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. Project classifications: Replacement projects. There are two types of replacement d







Flashcard 1439824481548

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
What is the main difference between monopolistic competition and perfect competition?
Answer
Product differentiation

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In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the

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2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Arabists should analyze the ways in which generations of amateur audiences reinterpreted old literature in order to breathe new life into traditional texts, which can turn cold and alien. Without an analysis of audience reception, we are left with a canon detached from the particular needs and choosy sensibilities of those who exercised the privilege of selecting texts for future transmission—or not.
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Language is not arbitrary linguistic forms applied to a cultural reality that can be found outside of language in the real world. Without language, the habits, beliefs, institutions, and monuments that we call culture would be just observable realities, not cultural phenomena. To become culture, they have to have meaning, which, when given to foods, gardens and ways of life, constitutes culture.
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#economia #mises
O que era necessário para cons- truir a sociedade ideal, pensavam eles, eram bons princípios e cidadãos virtuosos. Com homens honrados, qualquer utopia podia ser realizada.
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#economia #mises
Praxeologia:Ciência ou teoria geral da ação humana. Mises definiu ação como “manifestação da vontade humana”: ação como sendo um “comportamento propositado”. Busca conhecimento que seja válido sempre que as condições correspondam exatamente àquelas consideradas na hipótese teórica. Sua afirmação e sua proposição não decorrem da experiência: antecedem qualquer compreensão dos fatos históricos.
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#economia #mises
Cataláxia – a teoria das relações de troca e dos preços.
Analisa todas as ações baseadas no cálculo monetário e rastreia a formulação de preços até a sua origem, ou seja, até o momento em que o homem fez sua escolha.
Explica os preços de mercado como são e não como deveriam ser. As leis da cataláxia não são julgamentos de valor; são exatas, objetivas e de validade universal
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#economia #mises
a economia toma-se uma parte – embora até agora a parte elabo- rada – de uma ciência mais universal: a praxeologia.
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#economia #mises
A Escola Historicista Alemã sustentava que a história é a única fonte de conhecimento sobre a ação humana e sobre assuntos econômicos, e que só no estudo dos dados e estatísticas históricas a economia poderia formular suas leis e teorias.
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#economia #mises
O polilo- gismo e o irracionalismo atacam a praxeologia e a economia. Embora suas afirmações sejam feitas de maneira geral, referindo-se a todos os ramos do conhecimento, na realidade visam às ciências relativas à ação humana. Afirmam ser uma ilusão acreditar que a pesquisa científica pode produzir resultados válidos para gente de todas as épocas, raças e classes sociais, e se comprazem em depreciar certas teorias físicas e biológicas como burguesas ou ocidentais
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#economia #mises
A tecnologia da União Soviética utiliza sem escrúpulos todos os resultados da física, química e biologia burguesa. Os físicos e engenheiros nazistas não despreza- ram a utilização de teorias, descobertas e invenções das raças e nações “inferiores”. O comportamento dos povos de todas as raças, religiões, nações, grupos linguísticos ou classes sociais demonstra claramente que eles não endossam as doutrinas do polilogismo e do irracionalis- mo no que concerne à matemática, à lógica e às ciências naturais.
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#economia #mises
trezentos anos e a aplicação prática desses resultados foi o que deu origem a uma melhoria, sem precedentes, no padrão de vida em geral. Mas, dizem esses críticos, as ciências sociais falharam com- pletamente no que diz respeito a tornar mais satisfatórias as condi- ções sociais. Não eliminaram a miséria e a fome, crises econômicas e desemprego, guerra e tirania. São estéreis e não contribuíram para a promoção da liberdade e do bem estar geral
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Flashcard 1708297161996

Tags
#economia #mises
Question
[...]:Ciência ou teoria geral da ação humana. Mises definiu ação como “manifestação da vontade humana”: ação como sendo um “comportamento propositado”. Busca conhecimento que seja válido sempre que as condições correspondam exatamente àquelas consideradas na hipótese teórica. Sua afirmação e sua proposição não decorrem da experiência: antecedem qualquer compreensão dos fatos históricos.
Answer
Praxeologia

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Praxeologia:Ciência ou teoria geral da ação humana. Mises definiu ação como “manifestação da vontade humana”: ação como sendo um “comportamento propositado”. Busca conhecimento que seja válido semp

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Flashcard 1708298734860

Tags
#economia #mises
Question
Praxeologia:Ciência ou teoria geral da [...] humana. Mises definiu [...] como “manifestação da vontade humana”: [...] como sendo um “comportamento propositado”. Busca conhecimento que seja válido sempre que as condições correspondam exatamente àquelas consideradas na hipótese teórica. Sua afirmação e sua proposição não decorrem da experiência: antecedem qualquer compreensão dos fatos históricos.
Answer
ação

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Praxeologia:Ciência ou teoria geral da ação humana. Mises definiu ação como “manifestação da vontade humana”: ação como sendo um “comportamento propositado”. Busca conhecimento que seja válido sempre que as condições correspondam

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Flashcard 1708301880588

Tags
#economia #mises
Question
[...] – a teoria das relações de troca e dos preços.
Analisa todas as ações baseadas no cálculo monetário e rastreia a formulação de preços até a sua origem, ou seja, até o momento em que o homem fez sua escolha.
Explica os preços de mercado como são e não como deveriam ser. As leis da [...] não são julgamentos de valor; são exatas, objetivas e de validade universal
Answer
Cataláxia

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Cataláxia – a teoria das relações de troca e dos preços. Analisa todas as ações baseadas no cálculo monetário e rastreia a formulação de preços até a sua origem, ou seja, até o momento em qu

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Flashcard 1708304239884

Tags
#economia #mises
Question
Cataláxia – a teoria das relações de [...] e dos [...] .
Answer
troca
preços

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Cataláxia – a teoria das relações de troca e dos preços. Analisa todas as ações baseadas no cálculo monetário e rastreia a formulação de preços até a sua origem, ou seja, até o momento em que o homem fez sua escolha. E

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Flashcard 1708307385612

Tags
#economia #mises
Question
A Escola [...] Alemã sustentava que a [...] é a única fonte de conhecimento sobre a ação humana e sobre assuntos econômicos, e que só no estudo dos dados e estatísticas [...] a economia poderia formular suas leis e teorias.
Answer
Historicista
história
históricas

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A Escola Historicista Alemã sustentava que a história é a única fonte de conhecimento sobre a ação humana e sobre assuntos econômicos, e que só no estudo dos dados e estatísticas históricas a economia poderi

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Flashcard 1708334386444

Question

Arabists should analyze the ways in which generations of amateur audiences reinterpreted old literature in order to breathe new life into traditional texts, which can turn cold and alien. Without an analysis of [...], we are left with a canon detached from the particular needs and choosy sensibilities of those who exercised the privilege of selecting texts for future transmission—or not.

Answer
audience reception

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Arabists should analyze the ways in which generations of amateur audiences reinterpreted old literature in order to breathe new life into traditional texts, which can turn cold and alien. Without an analysis of audience reception, we are left with a canon detached from the particular needs and choosy sensibilities of those who exercised the privilege of selecting texts for future transmission—or not. </spa

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Flashcard 1708337532172

Question
Language is not arbitrary linguistic forms applied to a cultural reality that can be found outside of language in the real world. Without language, the habits, beliefs, institutions, and monuments that we call culture would be just observable realities, not cultural phenomena. To become culture, they have to have [...], which, when given to foods, gardens and ways of life, constitutes culture.
Answer
meaning

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that can be found outside of language in the real world. Without language, the habits, beliefs, institutions, and monuments that we call culture would be just observable realities, not cultural phenomena. To become culture, they have to have <span>meaning, which, when given to foods, gardens and ways of life, constitutes culture.<span><body><html>

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TOPIC LEVEL LEARNING OUTCOME
#corporate-finance #study-session-10
Some academic studies have shown that well governed companies may perform better in financial terms. Increasingly, investment approaches that consider environmental, social, and governance factors, known as ESG, are being adopted. In addition to good governance practices, management decisions regarding investment and financing also play a central role in corporate profitability and performance. To remain in business as a going concern and to increase shareholder value over time, management must consistently identify and invest in profitable long-term capital projects relative to cost of capital (financing) and make optimal use of leverage and working capital in day to day operations.
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Flashcard 1708342512908

Tags
#reading-34-corporate-governance-and-esg-intro
Question
ESG
Answer
Environmental, social and governance.

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Flashcard 1708344872204

Tags
#2-corporate-governance-overview #reading-34-corporate-governance-and-esg-intro
Question
Which 2 theories are involved in CG?
Answer
Shareholder and Stakeholder theories

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Flashcard 1708347755788

Tags
#3-stakeholders-groups #reading-34-corporate-governance-and-esg-intro
Question
A particular shareholder or block of shareholders holding a percentage of shares that gives them significant voting power.
Answer
Controlling Shareholders

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Flashcard 1708349590796

Tags
#3-stakeholders-groups #reading-34-corporate-governance-and-esg-intro
Question
A particular shareholder or block of shareholders holding a small proportion of a company’s outstanding shares, resulting in a limited ability to exercise control in voting activities.
Answer
Minority Shareholders

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