[Anonymous]

For anyone who’s interested or is taking BEC soon and wants to practice. We did this in the Q2 FAR group and it was really helpful, especially for memorizing formulas, which as we all know, BEC is heavy with. Answer or ask your own question! Just be sure to come back on here and let the person who answered know if they were right or wrong 🙂

I’ll start it off:

What is the formula to calculate Marginal Propensity to Consume (MPC)?

[Anonymous]

Define interest rate risk and credit risk

[Anonymous]

@stoleway what do you mean by references? Systemic is anything economy wide, that cannot be diversified against.

[Anonymous]

Interest rate risk is the exposure of an entity to the fluctuations in interest rates, which in turn can benefit or hurt the organization (fixed versus variable exposure taken into account).

Credit risk is the risk that the borrower may not fulfill their obligations. As credit ratings decrease, generally interest rates charged on loans to those entities increase.

[Anonymous]

Correct @Bpk!

[Anonymous]

What pieces of information are necessary for the use of the CAPM?

[Anonymous]

What's the times interest earned ratio?

[Anonymous]

EBIT / Interest

[Anonymous]

CAPM Components:

krf= risk free rate

bi= beta

km= market rate

[Anonymous]

@Amanda, yepp! CAPM formula is RF + B(RM-RF). RM-RF can also be called the market risk premium.

[Anonymous]

What's the formula for the DCF method of computing kre?

[Anonymous]

(D1/P0) + g

[Anonymous]

What would happen to GDP and/or Price of cars, if the cost of gasoline was to rise? And which curve(s) would shift what direction?

[Anonymous]

Correct for the DCF formula.

Since that would be a rise in the price of a complementary good, the demand curve would shift left and price and GDP or quantity would go down.

[Anonymous]

Correct!

[Anonymous]

What's the main benefit of EDI vs. E-commerce?

[Author]

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