Business: Trade and Exchange

Business Final Exam (December 17th from 9:45-12:00 in the BBC )classrooms

Trade and Exchange

Under what conditions do two parties enter into exchange?

Price, Value, Cost (in “the Goal of Business” video)

You should be able to categories a variety of often mentioned goals as drivers of the more fundamental business goals of creating value, raising prices, or reducing costs.

Supply and demand

What does a demand curve represent? What about the supply curve? What does the point at which they cross tell us? You should be able to take supply and demand data and use it to calculate an equilibrium price and quantity.

Marketing

What is marketing? What is the marketing mix? What does it mean to segment a market? What is a channel? How might you build market share? (And how do you calculate market share?) What, from a marketing standpoint, is involved in creating a new product and bringing it to market? Ethical issues in marketing.

Accounting

What are the functions of cost accountants and financial accountants? What is the basic accounting equation? You should be able to categorize transactions into their appropriate categories on a balance sheet and build a profit and loss statement from information about what a company takes from sales in and spends to generate them. 

Finance

What are the ways in which firms raise money to fund their operations and growth? What are the main markets for financial instruments? What is the difference between a primary and a secondary market, and between trades on an exchange and ‘over-the-counter’ trades?  Where are the world’s major financial markets? What is a bond? To what does a share (or several) entitle you? What is a share’s ‘par value’; and its market value? Are they the same? How do bonds differ from shares? What kinds of entities issue shares? What kinds of entities issue bonds? What is sovereign debt? When would you use a forward contract? Or a future? What is an option? What is financial leverage?

How can you value a company's shares based on their earnings? What is the discount rate? How do you calculate the present value of future cash flows?

Organizational Behavior

Decision theory

You should be able to apply decision theory so solve simple discrete choice (fixed number of defined outcomes) problems.  

Public vs Private Goods

What is a public good as distinct from a public good? What is the free-rider problem? What are the two institutions that might help deal with the free-rider problem associated with public goods (or public ‘bads’)?

Firm ownership and corporate governance

Who owns the firm? What does limited liability mean? Who is responsible for looking after shareholders' interests? Who are a firm’s residual claimants? You should be able to calculate your share of potential future earnings of a firm in which you hold shares. Who are a firm’s principals and who are its agents? How do economists suggest dealing with the principal-agent problem?

Excel skills

The exam will include exercises similar to those we have done in class using Excel.