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Problem set1 - BNFN 416 Investment Management Problem set...

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BNFN 416 Investment Management Problem set 1 (Reference chapters 1 and 21) Q1) Suppose you discover a treasure chest of $10 billion in cash. a) Is this a real or financial asset and why? b) Is society any richer for the discovery and Why? c) Are you wealthier? d) Can you reconcile your answers to (b) and (c)? Is anyone worse off as a result of the discovery? Q2) Financial engineering has been criticized as nothing more than paper shuffling. Critics argue that resources used for rearranging wealth that is bundling and unbundling financial assets. This might be better spent on creating wealth that is creating real assets. a) Evaluate this criticism. b) Are any benefits realized by creating an array of derivative securities from various primary securities? Q3) What is the relationship between securitization and the role of financial intermediaries in the economy? What happens to financial intermediaries as securitization?
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