The Asian Financial Crisis
What were the major impacts of the Asian Financial Crisis in the process of modernization in the Philippines?
In this process of modernization, was there a social class that had a bigger role compared to other classes and why?
Sample Solution
end of the period. Investors weigh the portfolio taking into account the expected return and standard The Asian Financial Crisis deviation of the various portfolios. Given two identical portfolios, lower standard deviation that will be chosen. 2. Investors are price takers and have homogeneous expectations about asset returns, which have a normal joint distribution. 3. There is a risk-free asset su The Asian Financial Crisis ch that Investors can borrow or lend unlimited risk free rate amounts. The risk-free rate is the same for all investors 4. The values are infinitely divisible. The amounts all assets are marketable and perfectly divisible. If an investor can acquire desired fraction of a share. 5. There is perfect information. Asset markets are frictionless; information has no cost and is available to all investors. 6. There are no market imperfections (such as taxes, laws, etc.). That is, taxes and transaction costs are The Asian Financial Crisis irrelevant. These cases show that CAPM is based on the tenets of microeconomic theory, where the consumer (the investor risk aversion) selected from indifference curves that provide the same utility between risk and performance. 2.2.3. This choice between risk and return the investor takes on the one hand, to the formation of portfolios and the pursuit of portfolios that include, in addition to risky assets whose values is risk-free rate, and secondly to face a market for loanable funds must be in balance in every moment of time. Additionally, as any rational consumer, the risk adverse investor will seek to maximize the expected return on their assets and minimize risk. This behaviour of investors means that there is a unique set of portfolios that maximize expected return of an asset and minimize the risk; this series of portfolios are commonly referred efficient portfolios. 2.3. Separation theorem Tobin (1958) inte The Asian Financial Crisis grates the term ârisk-free assetâ in the process of selecting investment when identifies the need for the investor to mitigate the uncertainty for future returns which the inve>
end of the period. Investors weigh the portfolio taking into account the expected return and standard deviation of the various portfolios. Given two identical portfolios, lower standard deviation that will be chosen. 2. Investors are price takers and have homogeneous expectations about asset returns, which have a n The Asian Financial Crisis ormal joint distribution. 3. There is a risk-free asset such that Investors can borrow or lend unlimited risk free rate amounts. The risk-free rate is the same for all investors 4. The values are infinitely divisible. The amounts all assets are marketable and perfectly divisible. If an investor can acquire desired fraction of a share. 5. There is perfect information. Asset markets The Asian Financial Crisis are frictionless; information has no cost and is available to all investors. 6. There are no market imperfections (such as taxes, laws, etc.). That is, taxes and transaction costs are irrelevant. These cases show that CAPM is based on the tenets of microeconomic theory, where the consumer (the investor risk aversion) selected from indifference curves that provide the same utility between risk and performance. 2.2.3. This choice between risk and return the investor takes on the one hand, to the formation of portfol The Asian Financial Crisis ios and the pursuit of portfolios that include, in addition to risky assets whose values is risk-free rate, and secondly to face a market for loanable funds must be in balance in every moment of time. Additionally, as any rational consumer, the risk adverse investor will seek to maximize the expected return on their assets and minimize risk. This beha The Asian Financial Crisis viour of investors means that there is a unique set of portfolios that maximize expected return of an asset and minimize the risk; this series of portfolios are commonly referred efficient portfolios. 2.3. Separation theorem Tobin (1958) integrates the term ârisk-free assetâ in the process of selecting investment when identifies the need for the investor to mitigate the uncertainty for future returns which the inve>
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