Questions from Financial Markets

Q: What are debentures? How do they differ from subordinated debentures?

What are debentures? How do they differ from subordinated debentures?

Q: Based on your forecast of interest rates, would you recommend that

Based on your forecast of interest rates, would you recommend that investors purchase bonds today? Explain.

Q: Assume that inflation is expected to decline in the near future.

Assume that inflation is expected to decline in the near future. How could this affect future bond prices? Would you recommend that financial institutions increase or decrease their concentration in l...

Q: Discuss why many financial institutions have expanded internationally in recent years.

Discuss why many financial institutions have expanded internationally in recent years. What advantages can be obtained through an international merger of financial institutions?

Q: Assume that oil-producing countries have agreed to reduce their oil

Assume that oil-producing countries have agreed to reduce their oil production by 30 percent. How would bond prices be affected by this announcement? Explain.

Q: Explain the impact of a decline in interest rates on:

Explain the impact of a decline in interest rates on: a. An investor’s required rate of return. b. The present value of existing bonds. c. The prices of existing bonds.

Q: Why is the relationship between interest rates and bond prices important to

Why is the relationship between interest rates and bond prices important to financial institutions?

Q: Determine the direction of bond prices over the last year and explain

Determine the direction of bond prices over the last year and explain the reason for it.

Q: Many investors that purchased the mortgage-backed securities just before

Many investors that purchased the mortgage-backed securities just before the credit crisis believed that they were misled, because these securities were riskier than they thought. Who was at fault?

Q: How would a financial institution with a large bond portfolio be affected

How would a financial institution with a large bond portfolio be affected by falling interest rates? Would it be affected by a greater degree than a financial institution with a greater concentration...