The financial system can be best described as: A. A computer system that is used to process trades/transactions by participants in financial markets and/or institutions. B. Financial markets plus institutions. C. Participants and players in financial markets and the direct route for channeling funds in the economy from the surplus agents to deficit agents. 2. Ion National Bank issues a 6-month, USD 1 million CD at 4.0% and funds a loan in Argentine pesos (ARS) at 6.5%. The spot rate for the ARS was ARS 2.27 per USD at the time of the transaction. In 6 months, the ARS will have depreciated to ARS 2.30 per USD. What is the realized nominal annual spread on the loan? A. -1.07% B. -0.19% C. 0.11% 3. Based on semiannual compounding, what would the price be of a 13- year, 10% coupon, and $1,000 par value bond that is currently yielding 9.25%? A. 1,036.03 B. 1,055.41 C. 1,056.05 4. What is the price of a T-bill that has a bank discount yield of 5%, a $100,000 face value and a 180 day holding period? A. 102,500 B. 97,534 C. 97,500 5 Frieda Wanna is a taxable investor who is currently in the 28% income-tax bracket. She is considering purchasing a corporate bond with a yield of 12%. What yield from a municipal bond will make her indifferent between the two?: A. 8.64% B. 12.00% C. 16.67% 6. Which of the following is not an use of secondary markets: A. To help firms and other institutions to raise funds(capital) B. To provide liquidity to existing shareholders C. Price discovery 7. Reinvestment risk would not occur if: A. Interest rates shifted overtime B. The bonds are callable C. Only zero-coupon bonds are purchased 8. Estimate the percentage price change in bond price from a 25 basis point increase in yield on a bond with duration of 7 and convexity of 243. A. 1.67% decrease B. 1.75 % increase C. 1.75% decrease 9. According to the loanable funds framework, which of the following cannot cause a shift in the curve for the demand for money? A. Income levels of society B. Liquidity C. Interest Rates 10. The 4-year spot rate is 8.36% and the 3 year spot rate is 8.75%.what is the 1-forward rate three years from today (assuming these are annual rates)? A. 0.39% B. 7.20% C. 8.56%
The financial system can be best described as:
A. A computer system that is used to process trades/transactions by
participants in financial markets and/or institutions.
B. Financial markets plus institutions.
C. Participants and players in financial markets and the direct route for
channeling funds in the economy from the surplus agents to deficit
agents.
2. Ion National Bank issues a 6-month, USD 1 million CD at 4.0% and
funds a loan in Argentine pesos (ARS) at 6.5%. The spot rate for the
ARS was ARS 2.27 per USD at the time of the transaction. In 6 months,
the ARS will have
realized nominal annual spread on the loan?
A. -1.07%
B. -0.19%
C. 0.11%
3. Based on semiannual compounding, what would the price be of a 13-
year, 10% coupon, and $1,000 par value bond that is currently yielding
9.25%?
| A. 1,036.03 |
| B. 1,055.41 |
| C. 1,056.05 |
4. What is the price of a T-bill that has a bank discount yield of 5%, a
$100,000 face value and a 180 day holding period?
A. 102,500
B. 97,534
C. 97,500
5 Frieda Wanna is a taxable investor who is currently in the 28% income-tax
bracket. She is considering purchasing a corporate bond with a yield of 12%.
What yield from a municipal bond will make her indifferent between the two?:
A. 8.64%
B. 12.00%
C. 16.67%
6. Which of the following is not an use of secondary markets:
A. To help firms and other institutions to raise funds(capital)
B. To provide liquidity to existing shareholders
C. Price discovery
7. Reinvestment risk would not occur if:
A. Interest rates shifted overtime
B. The bonds are callable
C. Only zero-coupon bonds are purchased
8. Estimate the percentage price change in
point increase in yield on a bond with duration of 7 and convexity of 243.
A. 1.67% decrease
B. 1.75 % increase
C. 1.75% decrease
9. According to the loanable funds framework, which of the following cannot
cause a shift in the curve for the demand for money?
A. Income levels of society
B. Liquidity
C. Interest Rates
10. The 4-year spot rate is 8.36% and the 3 year spot rate is 8.75%.what is
the 1-forward rate three years from today (assuming these are annual
rates)?
A. 0.39%
B. 7.20%
C. 8.56%
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