Questions from Financial Markets

Q: A bank has issued a six-month, $5 million

A bank has issued a six-month, $5 million negotiable CD with a 0.35 percent quoted annual interest rate (iCD, sp). a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the ne...

Q: What are the major instruments traded in capital markets?

What are the major instruments traded in capital markets?

Q: Which of the capital market instruments is the largest in terms of

Which of the capital market instruments is the largest in terms of dollar amount outstanding in 2016?

Q: If a U.S. bank is holding Japanese yen in

If a U.S. bank is holding Japanese yen in its portfolio, what type of exchange rate movement would the bank be most concerned about?

Q: If we observe a one-year Treasury security rate higher than

If we observe a one-year Treasury security rate higher than the two-year Treasury security rate, what can we infer about the one-year rate expected one year from now?

Q: What should happen to a security’s nominal interest rate as the security’s

What should happen to a security’s nominal interest rate as the security’s liquidity risk increases?

Q: Suppose that you purchase a bond that matures in five years and

Suppose that you purchase a bond that matures in five years and pays a 13.76 percent annual coupon rate. The bond is priced to yield 10 percent. a. Show that the duration is equal to four years. b. Sh...

Q: An insurance company is analyzing the following three bonds, each with

An insurance company is analyzing the following three bonds, each with five years to maturity, annual interest payments, and is using duration as its measure of interest rate risk: a. $10,000 par valu...

Q: BSW Bank currently has $150 million in transaction deposits on its

BSW Bank currently has $150 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 10 percent of transaction deposits. a. If the Federal...

Q: MLK Bank has an asset portfolio that consists of $100 million

MLK Bank has an asset portfolio that consists of $100 million of 30-year, 8 percent annual coupon, $1,000 bonds that sell at par. a. What will be the bonds’ new prices if market yields change immediat...