Questions from Financial Markets

Q: The Acme Corporation has been acquired by the Conglomerate Corporation. To

The Acme Corporation has been acquired by the Conglomerate Corporation. To help finance the takeover, Conglomerate is going to liquidate the overfunded portion of Acme’s pension fund...

Q: A DI has the following assets in its portfolio: $20

A DI has the following assets in its portfolio: $20 million in cash reserves with the Fed, $20 million in T-bills, and $50 million in mortgage loans. If it needs to dispose of its assets at short noti...

Q: Calculate the value of (a) the mortgage pool and

Calculate the value of (a) the mortgage pool and (b) the GNMA pass-through security in Problem 9 if market interest rates increase 50 basis points. Assume no prepayments.

Q: Assume an FI originates a pool of short-term real estate

Assume an FI originates a pool of short-term real estate loans worth $20 million with maturities of five years and paying interest rates of 9 percent (paid annually). a. What is the average payment re...

Q: An insurance company’s projected loss ratio is 64.8 percent and

An insurance company’s projected loss ratio is 64.8 percent and its expense ratio is 25.6 percent. The company estimates that dividends to policyholders will be 6 percent. What must be the minimum yie...

Q: An investor purchases a mutual fund share for $100. The

An investor purchases a mutual fund share for $100. The fund pays dividends of $3, distributes a capital gain of $4, and charges a fee of $2 when the fund is sold one year later for $105. What is the...

Q: If interest rates rise and an investor holds a bond for a

If interest rates rise and an investor holds a bond for a time longer than the duration, will the return earned exceed or fall short of the original required rate of return?

Q: Why is the market value of equity a better measure of a

Why is the market value of equity a better measure of a bank’s ability to absorb losses than book value of equity?

Q: Which of the following assets or liabilities fit the one-year

Which of the following assets or liabilities fit the one-year rate or re pricing sensitivity test? (LG 22-1) a. 91-day U.S. Treasury bills. b. 1-year U.S. Treasury notes. c. 20-year U.S. Treasury bond...

Q: In what ways are securities firms and investment banks financial intermediaries?

In what ways are securities firms and investment banks financial intermediaries?