What are the three markets in financial market

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Reference no: EM13748270

Unit 1

Q1: What are the three markets in financial market? Why is each one of them important?

Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

Q2: Why has internationalization of financial markets become important? What are investment opportunities in the international financial markets?

Q3: What is the meaning of moral hazard, and why is it an important concept for financial institutions?

Q4: What does it mean when we refer to the idea of risk sharing?

Unit 2

Q1: What are the four variables that impact demand for assets by identifying the cause and effect for each as it relates to an increase in quantity demanded?

Q2: What is meant by the term "market equilibrium", and why is this important within the study of supply and demand for the Bond Market?

Q3: What are the differences between real and nominal rates? Explain why this is important to induce action on the part of borrowers and lenders?

Q4: If Wilma borrows $5,000 from her brother (at 5% interest per year) and the loan matures in 10 years, how much will she have to pay annually to pay the loan off in 10 years? How much will she have to pay annually to pay the loan off in four years? (Show all work/calculations/formulas. You may use a financial calculator, but must identify your methodology.)

Unit 3

Q1: What theory most identifies with the term structure of interest rates? And, why?

Q2: Yearly rates are 4%, 5%, 6%, 7%, and 8% for the next five years. Please compute and explain the expected interest rate for both the three and four-year bonds during the period. (Show your work/calculations/formulas.)

Q3: Yearly rates are 4%, 5%, 6%, 7%, and 8% for the next five years. Please compute and explain the expected interest rate for both the three and four-year bonds if we show the liquidity premiums to be 1.25%, 1%, .75%, .5%, and 0%. (Show your work/calculations/formulas.)

Q4: What is evidence that does not support an efficient market hypothesis?

Unit 4

Q1: What are the functions of the 12 Federal Reserve banks, including their monetary policy actions?

Q2: What are the three tools of monetary policy?

Q3: How was the Federal Reserve System established? What is its organizational structure?

Q4: What are the advantages of inflation targeting?

Unit 5

Q1: What is current yield? We would like to determine the current yield of an investment (bond) that has a par value of $1,000 and a coupon interest rate of 3.25%. The market price is $927.50. (Show all work/calculations/formulas.) Note: Show the resulting percentage to at least two decimal places (for example, 1.25%, etc.

Q3: We are purchasing a 28-day Treasury bill, during a normal year (non-leap year), and want to find out both the discount rate and the investment rate. If we purchase the bill for $998, what are the two rates? If we purchase a 91 day Treasury bill for $995, what are the two rates? (Show all work/calculations/formulas.)

Q4: What are municipal bonds? We are comparing the equivalent tax-free rate of two investments: 1) A taxable corporate bond that is at a rate of 10%, with a marginal tax of 30%, and 2) A tax-free municipal bond that is at a rate of 8%. Which of the two investments offers a better return considering the tax impact? (Show all work/calculations/formulas.)

Unit 6

Q1: Within the secondary mortgage market is something called, mortgage-securities, also known as securitized mortgages. What is meant by those terms, and what are some examples?

Q2: What is a mortgage? Provide the history of mortgages before and after the Great Depression.

Q3: If we are comparing the U.S. dollar to the euro, and the euro increased in value from $1.35 to $1.45, what happened to the two currencies? Show the appreciation or depreciation rate for each currency. (Show all work/calculations/formulas.) If we are comparing the U.S. dollar to the yen, and the yen decreased in value from $.99 cents to $.90 cents, what happened to the two currencies? Show the appreciation or depreciation rate for each currency. (Show all work/calculations/formulas.)

Q4: What is meant by the term "secondary mortgage market"? How does it work?

Unit 7

Q1: What are the three-stages found within a financial crisis for Emerging Markets?

Q2: What are the various conflicts of interest found within the financial system?

Q3: What are the eight basic facts that support the reason for having financial institutions?

Q4: What are the three-stages found within a financial crisis for the United States?

Unit 8

Q1: What are some of the products and services created from technological advances in the banking system?

Q2: What are the protections and regulations created for pension plans?

Q3: What is the role of an investment bank, along with the products and services offered?

Q4: How has the banking system evolved into a "dual banking system", and what does this mean?

Reference no: EM13748270

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