| Baker's expected stock of future dollars is 150. In order to calculate how many future dollars he will supply at any given price, we must determine how many of those 150 dollars have greater value to him than that per-unit price, and how many have less value to him than the per-unit price. He will relinquish only those future dollars that are worth less to him than the price.
For instance, suppose that the price of a future dollar is $.91. His value scale shows that the first 94 units of his stock have greater value than $.91; consequently, he will withhold these from the market. The remaining units in his future stock, however, are worth less than $.91, and he will therefore want to sell these. 150 - 94 = ?
|
|
Baker
 1st dollar a year from now
$.92
2nd dollar a year from now
3rd dollar a year from now
. . .
94th dollar a year from now
$.91
95th dollar a year from now
. . .
143rd dollar a year from now
$.90
144th dollar a year from now
. . .
150th dollar a year from now
151st dollar a year from now
. . .
184th dollar a year from now
$.89
185th dollar a year from now
. . .
206th dollar a year from now
$.88
207th dollar a year from now
. . .
265th dollar a year from now
$.87
266th dollar a year from now
. . .
283rd dollar a year from now
$.86
284th dollar a year from now
stock:
$170,
150 dollars a year from now |
|