Tzu Tai

Fiscal and Monetary Policies in Reaction to the Financial Tsunami by the Taiwanese Government

The main purpose of this paper is to investigate the impact of the 2007 financial tsunami on the Taiwanese financial market. We find that, although significant for banks, security firms, and insurance companies, the effect was relatively lower if compared with that in Europe and the United States. In addition, we present fiscal and monetary policies issued by the Taiwanese government in reaction to the global financial crisis. These policy measures focused on stabilizing the financial market, reducing the level of unemployment, and creating more lending opportunities in support of Taiwanese companies. We also discuss the policy measures of the US government and other Asian countries in relation to the global financial crisis. Finally, we provide some suggestions to improve financial supervision and enhance financial reforms in Taiwan.

Statistical Decision Theory

This chapter was originally in Lee et al. (2013). It discusses the statistical decision theory. The main topics covered in this chapter are (1) Four Key Elements of a Decision, (2) Decisions Based on Extreme Values, (3) Expected Monetary Value and Utility Analysis, (4) Bayes Strategies, (5) Decision Trees and Expected Monetary Values, (6) Mean and Variance Trade-Off Analysis (Optional), and (7) The Mean and Variance Method for Capital Budgeting Decisions.

Simulation and Its Application

In this chapter, we will introduce Monte Carlo simulation which is a problem-solving technique. This technique can approximate the probability of certain outcomes by using random variables, called simulations. Monte Carlo simulation is named after the city in Monaco. The primary attractions in this place are casinos having gambling games, like dice, roulette, and slot machines. In these games of chance, there exist random behavior.

Other Continuous Distributions

We will now look at other continuous distributions that are commonly used in statistics. It is important to study all these distributions because later we will make statistical inferences based on the particular distribution we are working with. We should remember that the area under the density curve of each of these distributions is equal to 1.

Microsoft Excel Approach to Estimating Alternative Option Pricing Models

This chapter shows how Microsoft Excel can be used to estimate call and put options for (a) Black–Scholes model for individual stock, (b) Black–Scholes model for stock indices, and (c) Black–Scholes model for currencies. In addition, we are going to present how an Excel program can be used to estimate American Options. Section 26.2 presents an option pricing model for Individual Stocks, Sect. 26.3 presents an option pricing model for Stock Indices, Sect. 26.4 presents option pricing model for Currencies, Sect. 26.5 presents Bivariate Normal Distribution Approach to calculate American Call Options, Sect. 26.6 presents the Black’s approximation method to calculate American Call Options, Sect. 26.7 presents how to evaluate American Call option when dividend yield is known, and Sect. 26.8 summarizes this chapter. Appendix 26.1 defines the Bivariate Normal probability density function, and Appendix 26.2 presents the Excel program to calculate the American call option when dividend payments are known.

Portfolio Analysis and Option Strategies

The main purposes of this chapter are to show how Excel programs can be used to perform portfolio selection decisions and to construct option strategies. In Sect. 29.2, we demonstrate how Microsoft Excel can be used to inverse the matrix. In Sect. 29.3, we discuss how Excel programs can be used to estimate the Markowitz portfolio models. In Sect. 29.4, we discuss alternative option strategies. In Sect. 29.5, we summarize the results of this chapter.

Data Collection, Presentation, and Yahoo Finance

Statistics is mainly associated with numbers. A complete statistical analysis of a data set consists of both numbers and graphs. Graphs many times allow users to understand a data set that is very hard to capture with number.

Hedge Ratios: Theory and Applications

One of the best uses of derivative securities such as futures contracts is in hedging. In the past, both academicians and practitioners have shown great interest in the issue of hedging with futures. This is quite evident from the large number of articles written in this area.

Binomial Option Pricing Model Decision Tree Approach

Microsoft Excel is one of the most powerful and valuable tools available to the business users. The financial industry in New York City has recognized this value. We can see this by going to one of the many job sites on the Internet. Two Internet sites that demonstrate the value of someone who knows Microsoft Excel very well are www.dice.com and www.indeed.com. For both of these Internet sites, search for New York City and VBA, which is Microsoft Excel’s programming language, and you will see many job postings requiring VBA.

Sampling Distributions and Central Limit Theorem

Many times it is impossible or too costly to analyze the population data. Because of this we are only able to analyze a sample from the population. After analyzing the sample data, are we able to understand the population data from the sample data? The answer is yes. In this chapter we will study why the answer is yes.