1. Compare the role of mutual funds with that of commercial banks as financial intermediaries. (5 marks) 2. Briefly describe the role of derivative securities and discuss their potential impact on market stability and systemic risk. (5 marks)
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- • Contrast the activities of securities firms from other financial institutions. How do these financial institutions differ from hedge funds?Which of the following is most likely to expose the holders to counterparty credit risk? A. open-end mutual funds B. closed-end mutual funds C. ETNs D. ETFs1. What is the money market (include in your answer the characteristics of the money market and the types of securities that are traded in the money market)?
- 4. Outline and discuss the role of derivatives in risk management with particular reference to the history of derivatives, the types of derivative and the hedging opportunities available.A.Discuss three factors that affect net interest income.B.What are the objectives of the Basel III liquidity standards?C.Discuss any five principles of bank liquidity risk management.D.What are the major advantages of financial derivatives for managing interest rate risk compared to the traditional gap and duration gap techniques?E.Why is the marginal cost of funds critical in loan pricing?Which of the following represents broadest category of financial products that can be bought and sold? Which of the following represents broadest category of financial products that can be bought and sold? Equities Derivatives Securities Debt
- 6. Which of the following types of investment carries the greatest risk? Stocks Bonds Mutual funds Certificates of depositWhich one of the following is not a money market instrument? A. Treasury bill B. Negotiable certificate of deposit C. Commercial paper D. Treasury bond E. Eurodollar account Please explain all points without plagiarism Upvote ?sure8. According to the Loanable funds' theory, how are interest rates determined?9. Compare and contrast three different money market securities in terms of issuer, return, risk and tradability/liquidity.10. Explain the role of non-depository financial institutions within the financial sector? Discuss the core functions of any three of these institutions.
- Based upon risk, which of the following financial assets is likely to have the highest required rate of return? Select one: A. A corporate bond B. A U.S. Treasury bill C. A bank certificate of deposit D. A share of common stockWhich of the following is NOT a purpose of valuing financial securities? a. Valuation is used to provide sensible financial decisions.b. Valuation is used to get the intrinsic value of a financial security.c. Valuation is helpful for investors in order to determine whether to buy or sell their securitiesd. Valuation is used to predict the exact prices of financial securities.Which of the following is not a main core function of the financial system?a. Provide a payments system for the exchange of goods and services.b. Provide mechanisms to separate funds for smaller-scale investmentc. Provide the channels to transfer funds and economic resources across industriesd. Provide ways to manage uncertainty and mitigate risk According to the market segmentation theory of the term structure,a. the interest rate for bonds of one maturity is determined by the supply and demand for bonds of that maturity.b. bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time.c. investors' strong preference for short-term relative to long-term bonds explains why yield curves typically slope downward.d. only A and B of the above. Costs associated with the correspondent bank process include:a. Interestb. Currency conversion spreadc. Reputation costsd. Payroll costs