1. You deposit $200 in a bank account that pays an interest rate of 4%, compounded monthly. In excel, compute a
Annual Rate Periods per Year
Assignment 2, Chapter 2
Name: Olivia Regan
Submit your completed quizzes on Blackboard as an excel file. Please
give the filename as: FINA3317 Assignment 2 YourLastName. If
you have a really common last name then also include your first name
Practice Quiz 1, Chapters 1&2,
1. Which of the following is true about stock?
A. It represents ownership in a corporation
B. It entitles its owners to mandatory fixed payment
C. It gives its owner a risk-free source of income
D. It is unregulated
Quiz 1, Chapters 1&2,
January 21 , 2014
Work on this individually without notes. Please give the letter of the one best answer, in the
context of the topics assigned and discussed in this class. If you choose F. None of the above:
FINA3317-002 Practice Questions 1
Chapter 01 Introduction
IBM creates and sells additional stock to the investment banker Morgan Stanley. Morgan
Stanley then resells the issue to the U.S. public.
This transaction is an example of a(n)
October 13, 2015
Chapter 8stock markets
Chapter 9FX (foreign exchange) markets
Chapter 10derivatives markets.
Originally markets were organized auctions.
NYSE is about 230 years old, roughly the oldest stock exchange in the U.S.
October 22, 2015
Stock markets: securities traded
o Close-end funds
o Most bonds
o Money market securities
o Stocks not traded on exchange
o Some derivatives contract
o Foreign currency
October 27, 2015
Commercial BankingFirms get money by taking deposits (liabilities)
Banks use these funds to make loans (assets).
Balance sheet for a bank.
Assets vs. Liabilities Equity
Short term assets: Cash
Long term assets: loans and securi
October 29, 2015
Savings and Loans
Old US Banking System
o Merchant Banks made business loans and operated in big cities
o In small towns and rural areas, thrifts made home mortgage loans,
agricultural loans, and
Finance: the process by which monetary assets (e.g. money, funds) are reallocated from where
there is a surplus to where there is a deficit.
*Generally, individuals and households have surplus, because they earn more. Businesses have
Contract: an agreement between 2 or more economic entities
Security: a type of financial contract that involves a claim on cash flows
Characteristics of Securities:
determines how contracts outbreak
o Risk of CF:
1. Fixed: st
Practice Mid-Term Exam, Fall 2015
_1. Which of the following is true about primary markets? [Ch. 1]
A. They are where a security is first issued to investors
B. They are where a security is traded from one investor to another
C. All capital marke
FINA 3317 9/8/2015 Notes
You invest $100 for 1 year at 10% compounded annually.
o FV=PV(1+r)^n (compounding)
o r = period rate
o n = total number of periods
o PV=FV/(1+r)^n (discounting)
Compounding annually each period is one year.
Zero Coupon bond: is a security where the issuer promises to pay $1,000 at
some future date, or point in time (maturity date).
Investor demand will determine the price of this bond. From the price, we can then
compute the implied interest rate.
October 20, 2015
NYSEoldest U.S. stock exchange, about 1790; mostly lists large, established firms.
NASDAQelectronic exchange that lists small companies, about 1973; lists more
firms than NYSE.
Stocks can also be traded privately between institutions: dar
November 24, 2015
Types of Mutual Funds
Net Asset Value (NAV) = take value of all fund assets and divide by number of shares.
Market prices = price of a funds shares, as determined by trading on stock market.
November 17, 2015
o Legal structure: lots of partnerships, privately-held companies; unregulated
SEC: regulates public traded securities
FDIC: regulates deposits
FED: regulates large important institutions
Size of IBs
o Assets: not so big, com
November 5, 2015
o BHCregulated by FED
Chartered by the OCC or by state, and by FDIC
Insurance, brokerage, investment banking
Also lots of sm
November 12, 2015
Investment Banking Activities
o Advising (research, analysis)Consultant
o UnderwritingPure Investment Bank
Helping clients to issue (primary market) securities
Components of Underwriting:
Advising: type of security, amount, price, mar
November 3, 2015
Shadow Banking Sector
o Institutions that do bank-like functions that arent necessarily banks.
o Lenders that are not banks or deposit-takers that are not banks.
Non-banks that take deposits:
o Officially: none (not backed by FDIC)
December 3, 2015
o Issue currency
o Manage money supply
o Financial regulation
o Lender of last resort: bailouts
o Clearing, processing payments
o Manage exchange rate
o Research and data
o Banking for the government
US Central Bank: Federal
October 15, 2015
Types of markets and securities
o Liquid securities: organized markets (exchanges), electronic limit order books
o Illiquid securities: OTC (over-the-counter), market makers, private negotiations to
FINA 3317 -001 Class Notes 9/10/2015
A bond has a yield of 10% with a 10-year maturity. What would the price be for
coupon rates of 0% to 20%, in 1% increments? (Period rate 5%)
=Nominal interest rate=annual interest rate= sta
FINA 3317 9/10/2015 Notes
Example 1: A bond has a yield of 10% (period rate = 5%), what would the price (PV) be
for coupon rates of 0% to 20% in 1% increments? This bond matures in 10 years.
o =yield to maturity
o =nominal interest rat
CURRENCY RISK AND HEDGES
Greg Feigel, 2009 et. seq.
3.0% Country 1 interest rate, over some time period, = R 1
8.0% Country 2 interest rate, over some time period, = R 2
IN OTHER WORDS, in the future it takes M
IMPACT OF YIELD CURVE SHIFTS ON THE BALANCE SHEETS OF DEPOSITORY (LENDING) INSTITUTIONS
10.0% reserve requirement
7.0% capital requirement
$5.00 capital start point
REGULATION (RESERVE REQUIREMENTS), CREDIT EXPANSION, SECURITIZATION, AND SHADOW BA
LIA + OE
Bank starts with cash
FED sets reserve requirement
Loan is made
THE OLD WORLD
Ch10 Accrued interest- (annual coupon payment/2) *(days since last coupon payment/days separating coupon payment) Callable
Bonds-bonds that may be repurchased by the issuer at a specified call price during the call period. Convertible bond-a bond with an
I income/non I income 2.1217 0.994500
I income/non I income
Assets Under Management
JP Morgan Chase
Assets Under Management