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
INSTITUTIONS
1. Rank the following bank assets from most to least liquid:
a) Commercial loans
b) Securities
c) Reserves
d) Physical capital
The rank from most to least liquid is (c), (b), (a
TUTORIAL: MONETARY POLICY (CHAPTER 8)
Questions:
8.1.
8.2.
8.3.
8.4.
8.5.
8.6.
8-1.
State major tools and operations of monetary policy you know.
8-2.
What will happen with reserves and Ms if NBK sells T bonds to the Public?
8-3.
How the reserves and Ms c
TUTORIAL FOR CHAPTER 3:
WHAT DO INTEREST RATES MEAN AND WHAT IS THEIR ROLE IN VALUATION?
Questions:
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
QUESTIONS:
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 FOR CHAPTER 10: BOND MARKET
Theoretical Questions (taken from chapter 9 &10):
1.
2.
3.
4.
5.
6.
7.
8.
9.
Capital security exchange made up of computer networks.
STRIPS
Issued by business, usually unsecured, not more than 270 days maturity.
You se
TUTORIAL CHAPTER 11
STOCK MARKET
Theoretical questions:
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?
Problems:
1. Calculat
Sample problems for final exam
Some new sample problems will be added after we finish chapter 17
Problem 1.
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
Problem 1.
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
f.
Eurodollars
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
Problem 1
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.
Questions:
1.
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
VEHICLE SALES AGREEMENT
THIS VEHICLE SALES AGREEMENT is made this _ day of _, 20_, by and
among _ of _ (hereinafter known as
"Seller") and _, of _ (hereinafter known as "Buyer").
Buyer and Seller shall collectively be known herein as "the Parties".
BACKGR
Part IV: You find that a small business loan in the amount of 50,000 is the amount you need to purchase the restaurant location. After researching banks to find the best interest rate, you find that banks for small businesses offer the best interest rate
MATH 453
SOLUTIONS TO ASSIGNMENT 4 OCTOBER 7, 2004
Exercise 2 from Section 17, page 100 Using Theorem 17.2, A is closed in Y implies that it is the intersection of Y and a closed subset C of X: A = C Y. Since Y is given to be closed in X, A is the interse
MATH 453
SOLUTIONS TO ASSIGNMENT 9 NOVEMBER 11, 2004
Exercise 6 from Section 28, page 181 X is a metric space, so it is Hausdorff. Thus X is compact Hausdorff and we need only check that f is a continuous bijection. Continuity and injectivity is immediate
MATH 453
SOLUTIONS TO ASSIGNMENT 1 SEPTEMBER 8, 2004
Exercise 4 from Section 3, page 28 (a) Reflexivity, symmetry and transitivity for follow from the corresponding properties for equality, so is an equivalence relation. For instance, to check symmetry, w
MATH 453
SOLUTIONS TO ASSIGNMENT 11 DECEMBER 3, 2004
Exercise 2 from Section 51, page 330 This is a special case of problem 3 below. Exercise 3 from Section 51, page 330 (a) The formula F(x, t) = (1 - t)x is a homotopy between the identity map on either I
MATH 453
SOLUTIONS TO ASSIGNMENT 10 NOVEMBER 23, 2004
Exercise 5 from Section 30, page 194 (a) Let D be a countable dense subset of the metrizable space X. I claim that B = cfw_B(x, 1/n) | x D and n Z+ is a countable basis. First, B is countable, since b
MATH 453
SOLUTIONS TO ASSIGNMENT 6 OCTOBER 16, 2004
Exercise 4 from Section 20, page 127 (a) Since each of their component functions are continuous, all three of f , g and h are continuous when R is given the product topology. On the other hand, if R is g
MATH 453
SOLUTIONS TO ASSIGNMENT 2 SEPTEMBER 20, 2004
Exercise 1 from Sections 12 & 13, page 83 We will show that A is open by exhibiting it as a union of open sets. For each x A, let U x be the open set containing x such that U x A. It is easy to see tha
MATH 453
SOLUTIONS TO ASSIGNMENT 5 OCTOBER 8, 2004
Exercise 4 from Section 18, page 111 We check that f is an imbedding; the argument for g is similar. f is clearly a bijection between X and f (X) = X y0 , so we need only show that it and its inverse are
MATH 453
SOLUTIONS TO ASSIGNMENT 7 NOVEMBER 1, 2004
Exercise 3 from Section 23, page 152 Let B = A A . Then B is connected for each since A and A are connect and have a point in common. Now B = A A and the B 's have a point in common (A is nonempty) so A
MATH 453
SOLUTIONS TO ASSIGNMENT 8 NOVEMBER 6, 2004
Exercise 2 from Section 26, page 171 (a) Let X be a subspace of R in the finite complement topology, and let cfw_U be an open cover for X. Pick a particular U0 = R - A0 , where A0 is finite. Then X - U0
Math W4051: Problem Set 1 due Wednesday, September 12 1. Let d1 and d2 be two metrics on the same set X with the property that there exist constants C, C > 0 such that C d1 (x, y) d2 (x, y) C d1 (x, y), for all x, y X. (a) Show that a sequence cfw_xn of
Math W4051: Problem Set 2 due Wednesday, September 19 Reading: Munkres, Ch.1, 7, and Ch.2, 12-17. 1. Munkres 13, exercises 1 and 3 on p.83. 2. Munkres 16, exercise 3 on p. 92. Note: All the spaces below are endowed with the restriction of the Euclidean me
Math W4051: Problem Set 3 due Wednesday, September 26 Reading: Munkres, Ch.2, 18-22. 1. Munkres, Ch.2 17, exercises 6, 7, 8, 14, 15, 20 on p. 100-102. 2. Munkres, Ch.2 19, exercises 3, 7 on p. 118. 3. Munkres, Ch.2 20, exercise 5 on p. 127. 4. Recall the
Math W4051: Problem Set 4 due Wednesday, October 3 Reading: Munkres, Ch.3. 1. Define an equivalence relation on the space X = R2 - cfw_0 as follows: (x1 , y1 ) (x2 , y2 ) if and only if there exists k Z such that (x1 , y1 ) = (2k x2 , 2k y2 ). The space X