Explain how the fed controls the money supply

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1. An investor buys commercial paper with a 60 days maturity for $985,000. Par value is $1,000,000 and the investor holds it to maturity. What is the annualized yield? (Assuming a year has 360 days) Explain and list all the necessary calculation steps.

2. An investor sells short 200 shares of stock at $15 per share. The initial margin requirement is 60%. The investor earns no interest on funds in the margin account and no dividends are paid. What is the investor's rate of return after one year if the short sale is covered at $12 per share? Explain and list all the necessary calculation steps.

3. Explain how the fed controls the money supply.

Reference no: EM132704785

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