TUTORIAL FOR CHAPTER 10: BOND MARKET
Theoretical Questions (taken from chapter 9 &10):
Capital security exchange made up of computer networks.
Issued by business, usually unsecured, not more than 270 days maturity.
TUTORIAL FOR CHAPTER 5:
THE RISK AND TERM STRUCTURE OF INTEREST RATES
Questions: 5th edition - 3, 9, 10, 11.
1. Risk premiums on corporate bonds are usually anti-cyclical; that is they decrease during
business cycle expansion and increase during business
TUTORIAL FOR CHAPTER 17: BANKING AND THE MANAGEMENT OF FINANCIAL
1. Rank the following bank assets from most to least liquid:
a) Commercial loans
d) Physical capital
The rank from most to least liquid is (c), (b), (a
TUTORIAL: MONETARY POLICY (CHAPTER 8)
State major tools and operations of monetary policy you know.
What will happen with reserves and Ms if NBK sells T bonds to the Public?
How the reserves and Ms c
TUTORIAL FOR CHAPTER 3:
WHAT DO INTEREST RATES MEAN AND WHAT IS THEIR ROLE IN VALUATION?
1. There are 4 types of credit instruments. Identify their major features.
2. How do you understand the concept of Present Value (PV) and how is it applied
TUTORIAL FOR CHAPTER 12: THE MORTGAGE MARKETS
1. What distinguishes the mortgage markets from other capital markets?
Securities in the mortgage markets are collateralized by real estate.
2. Most mortgage loans once had balloon payments; now most current m
TUTORIAL FOR FOREIGN EXCHANGE MARKET
1. If the European price level rises by 5% relative to the price level in the United States, what doest the theory
of purchasing power parity predict will happen to the value of the euro in terms of dollars?
TUTORIAL CHAPTER 11
1. What distinguishes stocks from bonds?
2. Compare the problem of estimating stock cash flow to estimating bond cash flow. Which security
would you predict to be more volatile?
Sample problems for final exam
Some new sample problems will be added after we finish chapter 17
You invested your savings in 6 % coupon bond with the face value of 1000 USD and 3
years maturity. Suppose you have kept this bond for one year and
TUTORIAL FOR CHAPTER 9: MONEY MARKET
You have to choose between the investing in two 1000$ face value discount Treasury bills: one is a 91-day
with the current bid-ask prices 970$-985$; another is 182-day T bill that is offered for 950$. What a
1. Name money market instruments
a. Treasury Bills
b. Federal Funds
c. Repurchase Agreements
d. Negotiable Certificates of Deposit
e. Commercial Paper
2. Specific bond features
3. Who issues bonds
A number of different kinds of entity can i
Sample open questions (from all chapters studied)
Some more open questions will be included after we finish chapter 17
1. What is direct finance? (Chapter 1-2)
2. What is indirect finance? (Chapter 1-2)
3. What is duration? ( Chapter 3)
4. Describe pure e
As a trader working for a bank you participate in 26-week (182-day) Treasury bill auction. You have
$100 ml for this auction. You decide to submit noncompetitive bid for $50 ml and competitive bid
for $50 ml with price of $ 96. Another auction p
Questions and Problems on Duration and Interest rate risk.
What is the reinvestment risk?
(Reinvestment risk is the risk that as investors receive interest and principal payments on their
bonds they may have to reinvest these cash flows at a