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11F 378 AS01-2 - University of Windsor Odette School of...

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University of Windsor Odette School of Business 0472-378 Financial Markets and Institutions Assignment #1 Dr. Keith C.K. Cheung Due: October 12, 2011 Student Name: ___________________________________________ (Print) Student ID Number:_____________________________________ INSTRUCTIONS 1. No late assignment will be accepted 2. Solution can be found in the CLEW on October 19 3. The complete set has 70 multiple-choice questions. 4. Leave your answers in the scantron provided. Each correct response is worth one point. 5. Incorrect answers will not be penalized. Make an educated guess if needed. 6. This assignment is worth 10% of the overall grade. KEEP QUESTION PAPER INTACT 1
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MULTIPLE-CHOICE QUESTIONS are designed to test general understanding of a variety of concepts, as well as knowledge of various specific points. 1. What distinguishes financial institutions (FIs) from industrial firms? ____ A) FI balance sheets are almost totally comprised of financial securities whereas industrial firms hold substantial amounts of real assets B) Industrial firms are the customers of FIs C) FIs deal exclusively in primary securities while industrial firms specialize in secondary securities D) Industrial firms produce real goods or services while FIs only manipulate money E) Industrial firms are unregulated while FIs are heavily regulated 2. How much will you pay for a 181-day $1,000 Treasury bill to have an annual yield at 11.1% with simple interest calculation? ____ A) $1,000.00 B) $973.00 C) $947.41 D) $900.00 Hint: 3. Secondary securities ____ 4. The origination of a home mortgage loan is considered to be ____ 2
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(The following information relates to Questions 5 and 6) ABC Bank (seller) has made a “three against six” forward rate arrangement (FRA) with XYZ Bank (buyer). The notional amount is $75,000,000. The settlement rate is 5.15%. The agreement rate is 5.25%. The actual number of days in this three-month agreement is 90.
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