Questions from Financial Markets

Q: What is meant by an off-balance-sheet activity?

What is meant by an off-balance-sheet activity? What are some of the forces responsible for them?

Q: What is the difference between a required rate of return and an

What is the difference between a required rate of return and an expected rate of return?

Q: What is the relation between the expected rate of return and the

What is the relation between the expected rate of return and the required rate of return as they pertain to the fair market price and the current market price of a security?

Q: How does the location of money markets differ from that of capital

How does the location of money markets differ from that of capital markets?

Q: What is the difference between a zero-coupon bond and a

What is the difference between a zero-coupon bond and a coupon bond?

Q: How does equity valuation differ from bond valuation?

How does equity valuation differ from bond valuation?

Q: What happens to the fair present value of a bond when the

What happens to the fair present value of a bond when the required rate of return on the bond increases?

Q: All else equal, which bond’s price is more affected by a

All else equal, which bond’s price is more affected by a change in interest rates, a short-term bond or a long-term bond? Why?

Q: What are the major assets of the Federal Reserve System? Describe

What are the major assets of the Federal Reserve System? Describe each.

Q: Brown Bank currently has $350 million in transaction deposits on its

Brown Bank currently has $350 million in transaction deposits on its balance sheet. The current reserve requirement is 10 percent, but the Federal Reserve is increasing this requirement to 11 percent....