Notes, summaries, assignments, exams, and problems for University

SECI Knowledge Conversion Model

The SECI model describes four modes of knowledge conversion between Tacit (T) and Explicit (E) knowledge:

• Socialization: Tacit (T) → Tacit (T)
• Externalization: Tacit (T) → Explicit (E)
• Combination: Explicit (E) → Explicit (E)
• Internalization: Explicit (E) → Tacit (T)

Strategic Environment and Postures

The environment is characterized by dynamics, complexity, and uncertainty.

A) Different Types of Future

1. Clear Enough Future
2. Alternative Futures
3. Range of Futures
4. True Ambiguity

B) Strategic Postures

1. Shape the Future: Play a leadership role in establishing how the industry operates.
2. Adapt to the Future: React to market changes.
3. Reserve the Right to Play: Invest sufficiently to stay in the game, but avoid major commitments.

Organizational Citizenship Behavior

What are the 5 dimensions of Organizational Citizenship Behavior?

Organizational Citizenship Behavior (OCB) is the contribution that employees make to the overall welfare of the organization that goes beyond their required job duties.

The 5 main dimensions of citizenship behavior are:

1. Altruism: (helping behavior) willfully helping specific people with an organizationally-relevant task or problem.
2. Conscientiousness: being punctual, having attendance better than the group norm, following company rules, regulations, and procedures.
3. Courtesy: being mindful and respectful of people’s rights.
4. Sportsmanship: avoiding complaints, petty grievances, gossiping, and falsely magnifying problems.
5. Civic virtue: responsible participation

Aid to Families with Dependent Children (AFDC)

6. Know what AFDC is and how it applies to people. Aid to Families with Dependent Children

Key Political Concepts

• Neo-institutional: The way they interact and how they affect society.
• Interest Group: Organization of people who work together to protect and promote the government. Two categories: economic and noneconomic.
• Entrepreneurial: A person who organizes and operates a business/es, takes risk.
• Client: Government Owned Enterprise (GOE), prior to marketing or sales activities.
• Majoritarian: Democracy rule of society’s citizens.

Introducing a Bill in Congress

8. How can a bill be introduced in Congress? Members of Congress are the only ones who can introduce the bill at any time the House of Senate

Bureaucratic Inefficiency

Bureaucratic inefficiency might be desirable in that it might help protect our liberties.

Aid to Families with Dependent Children

The Aid to Families with Dependent Children program decreased in popularity as the public began to believe that it was encouraging out-of-wedlock births.

Defense Program

As Gallup Poll data shows, a majority of Americans believe that our defense program is"about righ" or"not strong enough"

Interstate Commerce Commission

The creation of the Interstate Commerce Commission (ICC) led to the federal government supervising railroad activities.

Congressional Terminology

a. Rider

An additional provision added to a bill or other measure under consideration by a legislature.

b. Cloture Rule

The only formal procedure... Continue reading "American Government: Key Concepts and Terms" »

Congresses Cons. Powers: Treaty Making, Appointment Powers, War Powers, Commerce Powers.

Financial Ratio Analysis

Usefulness of Ratio Analysis

1. Measure of Profitability

Ratio analysis provides context for evaluating a company's profit, such as comparing it to previous periods or industry averages. Ratios like Gross Profit Margin, Net Profit Margin, and Expense Ratio help assess profitability and identify areas for improvement.

2. Evaluation of Operational Efficiency

Ratios like Turnover Ratios and Efficiency Ratios can reveal how effectively a company manages its assets and resources, helping to identify areas of inefficiency and potential cost savings.

3. Ensure Suitable Liquidity

Ratios such as the Current Ratio and Quick Ratio measure a company's short-term liquidity, indicating its ability to meet immediate cash obligations and... Continue reading "Financial Ratio Analysis: Uses, Benefits, and Limitations" »

ERRONEOUS

Incorrect; mistaken; wrong; filled with errors.

Ferdinand Magellan is credited with proving the earth is spherical in nature, thus dispelling the erroneous notion that the world is flat.

ADMONISH

To counsel against, to earnestly warn.

After reviewing a manuscript J.K. Rowling had submitted, one publisher admonished her by saying that children would not be able to identify with the characters. Needless to say, the publisher’s admonition proved to be erroneous.

DEMARCATE

To clearly set or mark the boundaries of a group or geographic area.

Even after schools were technically integrated, students would quickly demarcate their own boundary lines and sit at cafeteria tables that were either all black or all white.

FOSTER

To promote and encourage.

Consider an European call option with strike equal to 10, T = 1, r = 0.05 and σ = 0.2. Using the following time-series:

1. For every time moment t = 0, 1/360, 2/360:

• Calculate the Black-Scholes price.
• Calculate the corresponding delta.
• Calculate the price of the corresponding replicating portfolio and its composition, if we consider a dynamic hedging.

2. Calculate a static hedging. What is the final value of the portfolio? Compare with the dynamic hedging results.

Solution

• At time 0, time to maturity is 1, and then
  • The Black-Scholes price is given by S0N(d1)−Ke−rT N(d2) = 10N(0.35)−10e−0.05N(0.15) = 1.0450
  • The Delta is given by N(d1) = N(0.35) = 0.6368
  • At time t = 0, the value of the replicating portfolio coincides with the Black-Scholes price

Problem 1: European Call Option Valuation

A stock price is currently at 40 euros. It is known that at month-end, the price will be either 42 euros or 38 euros. The risk-free interest rate is 8% per annum, continuously compounded. We have a call option with a strike price of 39 euros.

1. Shares for Riskless Portfolio: Calculate the number of shares to buy to create a riskless portfolio. Given Answer: 0.75 shares.
2. Cash for Replication: Determine the cash needed to replicate the portfolio at the end of the month. Given Answer: -57/2 euros.
3. One-Month European Call Value: What is the value of the one-month European Call option? Given Answer: 1.69 euros.
4. Put Option Value: What is the value of a corresponding put option? Given Answer: 0.43 euros.
5. Call-Put