Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 11 solution.
1. (2 point) Banking regulation suffers from the principal-agent problem. Describe
how this problem relates to regulators and politicians.
Tax
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 10 solution.
1. (2 point) Explain how technological advances can prevent regulatory agencies
from enforcing restrictions on bank branching?
Technological a
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 9 solution.
1. Banks typically hold more liquid assets than most other types of businesses.
Explain why?
Banks face liquidity risk risk of not being able t
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 8 solution.
1. (2 point) Describe the asymmetric information problems that an employer faces
when hiring a new employee. How can this employer try to solve
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 7 solution.
1. (1 point) Describe the procedure that clearing corporations use to eliminate the
risk of default on any of futures contracts.
Clearing corpo
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 6 solution.
1. (2 point) Explain the difference between adaptive expectations and rational
expectations?
According to the theory of adaptive expectations,
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 5. This assignment does not have to be turned in.
1. (2 points) What would you expect to happen to ratings of different bonds during a
recession?
Recession
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 4 solution.
1. (3 points) Suppose that you have $1000 to invest and there are two financial
instruments that you can purchase. The returns on each of these
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 3 solution.
1. (2 points) Compute the yield to maturity of the following bonds:
a. $100 face-value, 5-year, pure discount bond selling for $78. The yield t
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 2 solution.
1. (2 points) Consider an annuity that makes yearly payments C for as long as
someone lives. What would happen to the purchase price of the ann
Econ 353 Money, Banking, and Financial Institutions
Dzmitry Asinski
Spring 2006
Homework Assignment 1 answers. Due: Thursday, January 19.
1. (2 points) Explain the functions of money and the problems of barter that each
overcomes.
There are three function