Academic journal article Michigan Academician

Economics

Academic journal article Michigan Academician

Economics

Article excerpt

Why Not Returns Diagrams? Glenn Pettengill and George Chang, Grand Valley State University

Diagrammatic representations provide an important tool to facilitate student's understanding of the outcome of option strategies. Textbook presentations have relied on two types of option diagrams: payoff diagrams and profit diagrams. Both diagrams represent the value of an investment at the expiration date for the option. Payoff diagrams represent the intrinsic value of the option strategy at expiration on a per unit basis at various expiration prices for the underlying asset. Profit diagrams also show the results from an option strategy at expiration on a per unit basis at various expiration prices for the underlying asset.

What is important to any investor is the return that the investor earns. We argue that the per unit comparisons crucially mislead students in comparing the risk-return tradeoff across option strategies. What students need to see and understand is the comparative return patterns offered by various strategies. We argue without this information the student may be veiled from the very high risk and high potential return of option strategies both in an absolute sense and in a comparative sense. So we ask the question: Why not return diagrams? In answer to this query we create a new diagram, a return diagram.

The War on Poverty or the War on the Poor? Alex Tokarev, Alex Burns, Philip Schlosser, Tony Sierra, Kristin Tokarev, and Konstantin Zhukov, North wood University

One hundred and fifty years after the Civil War and fifty years after the Civil Rights Act, the gap between black minorities and the rest of America is still substantial. Black babies are much more likely to be aborted or born out of wedlock and, as President Obama noted, "children who grow up without a father are five times more likely to live in poverty and commit crime; nine times more likely to drop out of schools and 20 times more likely to end up in prison...And the foundations of our community are weaker because of it." What is the cause of poverty and violence in our black communities today? Could it be racism? Yes...and no. An unholy alliance of special interests, political and economic, has created a racist institutional framework for the exclusion of the blacks in the United States. And the irony is that most of those responsible are passionately anti-racist. This paper explores the perverse impacts of well-meaning policies and programs such as minimum wages, occupational licenses, welfare transfers, public education, and the "war on drugs"--racist not by announced intent, but by actual effect.

Diverse Reactions to the Great Recession and Their Global Implications: A Comparative Study of French and American Economic Histories. Chloe Benzer and Todd Yarbrough, Aquinas College

One of the most influential and consequential events of the past century arguably was the financial crash and subsequent Great Recession of 2008 and 2009--this catastrophe impacted the entire world on an economic, social, and political level. The following study sheds light on the overall economic and political differences between the United States and France. After comparing the economic and political histories of these two countries, outlining the economic atmosphere prior to the financial crisis, detailing the recovery efforts and presenting the differences, I draw conclusions about the near future in these countries and the ensuing impacts that may be seen in the rest of the world. The final section is a regression analysis of select macroeconomic variables that have varying effects on income inequality in France and the U.S., suggesting future policy may change in order to influence inequality through these variables.

An Axiomatic Method Applied to the Theory of Urban Evolution. Anders Engnell, Timothy Hodge, and Darrell Schmidt, Oakland University

The goal of this paper is to lay out a clear and specific mathematical method for solving problems that can be directly applied to the field of Urban Economics. …

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