Risk and investment

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Risk and Investment

  • What is the "present value," what is the "discount rate," and what happens to the "present value" of future returns when the "discount rate" rises?

   Present value now (t) is the value next year (t+1) divided by a discount factor (1+ your interest rate)

  • Write an expression for the present value of the future damage from climate change.What happens to the present value if the discount rate is higher?Does this explain why some ignore the dangers of climate change?
  • ReadReal World Micro,chapter 11.2 "Education: Not Just "Human Capital"" by Arthur MacEwan,Chapter 11.3 Putting the Screws to Generation Screwed by John Miller, andchapter 11.4"Why Free Higher Ed Can't Wait" by Biola Jeje and Belinda Rodriguez.
  • What is the economic motive for individuals to go to college and when does is it profitable for them to borrow money for college?
  • What happens if the interest rate they face in borrowing is less (perhaps because their parents are lending them the money) or more (perhaps because they have to borrow from a bank)?
  • Should government lend students money at a discount or provide college for free?

Reference no: EM131472256

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