CHAPTER
2-3
&
6-8
Introduction to
Financial Institutions
Chapters 1-2 from Fabozzi, Modigliani, and Jones
and
Chapter 1 from Saunders and Cornett by McGraw
Slide 2
Financial Institutions
Classification of Financial Institutions (FIs):
Spring 2015: FIN3103

Chapter 2
Exercises
1. You deposit $1000 in a bank account that pays interest every day and the amount of interest is
credited to the account every quarter. Calculate the equivalent annual rate if the stated rate is
8% p.a and there are 360 days in a year

Chapter 3 Exercises
1. Given $100, 000 to invest, what is the expected risk premium of reinvesting in
equities over risk-free T-Bills based on following table?
Actions
Invest in equities
Invest in risk-free T Bill
Probabilities
0.6
0.4
1.0
Expected return

Chapter 4 Exercises
1. The data below describes a three-stock market that satisfies the single index model.
Stock
Capitalisation
Beta
A
B
C
$3000
$1940
$1360
1
0.2
1.7
Mean Excess
Return
10%
2%
17%
Standard
Deviation
40%
30%
50%
Standard deviation of mark

Chapter 5 Exercises
1. You plan to buy a home costing $350,000 of which you need to pu 20% as down
payment. Bank is offering a loan rate of 3.5% fixed rate for 15 years. Calculate the
monthly payment.
2. You plan to take out a loan of $400,000 from a bank

Chapter 6a Exercise
1. A zero-coupon bond has a face value of $1000 and maturity of 5 years. If the YTM is
8%, calculate its current price.
2. A zero-coupon bond has a face value of $1000 and maturity of 5 years. If its current
price is $640, calculate it

Chapter 6b Exercise
1. Consider the following 4 bonds:
Bond
A
B
C
D
Coupon
12%
12%
8%
8%
Maturity
4 years
20 years
20 years
20 years
Initial YTM
10%
10%
10%
6%
Compare the interest rate sensitivity of these bonds by calculating the price changes for
inter

Chapter 7 Exercise
1. A 8% 3-year coupon bond pays semiannual coupon payments. Show how the price of
this bond can be written as the sum of a series of zero-coupon bonds. The YTM on
this bond is 9%.
2. There exists a 5-year 12% coupon bond with coupon pai

FIN201 Study Unit 6 (Chapter 10)
FIN201 Study Unit 6 (Chapter 10)
FIN201 Study Unit 6 (Chapter 10)
Case Study
FIN201 Study Unit 6 (Chapter 10)
Case Study

Chapter 8 Exercise
1. USD is quoted in Singapore at 1.2876. What will be the quote for SGD in New York?
2. USD is quoted in London at 1.5235. What will be the quote for GBP in New York?
3. USD is quoted in Singapore at 1.2876-92. What will be the quote fo

Chapter 9 Exercises
1. Given the following conditional value table, determine the appropriate decisions under
uncertainty using:
a. Maximax
b. Maximin
c. Equally likely
Alternatives
Build New Plant
Subcontract
Overtime
Do nothing
Favourable market
$350,00

Chapter 10 Exercises
1. Calculate the call option price from the data given below:
Current stock price
$23
Exercise price
$23.30
Stock price can either increase by 10% or decrease by 4%
Expiry in 40 days
Risk-free rate is 6%
2. Calculate the call option p

FIN201 Study Unit 5 (Chapter 8 & 9)
Chapter 8
FIN201 Study Unit 5 (Chapter 8 & 9)
Chapter 8
FIN201 Study Unit 5 (Chapter 8 & 9)
Chapter 8
Chapter 9: Case Study
Chapter 9
FIN201 Study Unit 5 (Chapter 8 & 9)

Chapter 1
Exercises
1. Consider a person has an income of $20,000 at the current time and $20,000 at the
end of year 1. Draw a diagram showing consumption possibilities if r = 8%.
2. If the real interest rate of interest is 3% and expected inflation is 5.

1
2 . . . .
3 Roger opened :1 sayings. atmunl 11101 :1 bank. I11 1110 ﬁrst year. Roger dL‘pOﬁllEd 51 {1.000 mlo
the :Iwnum. In the wumitl year. 110 dwindled 55.11110. In 1|“: 1|Iirt1 your. he bought a no“ car
4 and could 1101 14.106 any 11wnuy. In I11: 4'

CHAPTER
1
Introduction to
Financial Markets
re
utu d
lf
r al vide
fo
elf e pro
rs
you l not b !)
es
s
l
slid tes wi g note
t
prin ss no brin
E
t
EAS s!. Cla ill no
PL se
w
s
rer
cla lectu
(the
Chapters 1 from Fabozzi, Modigliani, and Jones
and
Chapter 1 f

CHAPTER
1725
Interest rates
and mortgage market
Adopted from Fabozzi and Modigliani by Pearson and
Saunders and Cornett by Dr. Z. R. Huszar
Page:2
Slide 2
Class outline
Spring 2014: FIN3103A - Financial Markets
1. Interest rates
2. Interest rate theory
L

Addition
al
reading
Introduction to financial
markets and financial
institutions:
Islamic financing
Slide 2
Spring 2014: FIN3103A: Financial Markets
Introduction to Islamic Banking
Muslim individuals are required to follow Shariah laws in
every aspect of

CHAPTER
45
Banks risk management
and the role of Central
Banks
Adopted from Fabozzi ,Modigliani, and Jones by Pearson and
Saunders and Cornett by Dr. Z. R. Huszar
Slide 2
Financial Institution (FI) roles
Spring 2014: FIN3103A: Financial Markets
Existence

Extra
reading
(Group 2)
presentati
on
Causes and
Treatments of
Bank Failures
Case Studies from US,
Asia and Europe
Page:2
Slide 2
outline
Introduction to Bank Failure
Spring 2014: FIN3103 - Financial Markets
Causes and Treatments of Bank Failures at the M

CHAPTER
1
Introduction to
Financial Markets
Chapters 1, from Fabozzi , Modigliani, and Jones
and
Chapter 1 from Saunders and Cornett by McGraw
Slide 2
Introduction - Financial Institutions
Spring 2014: FIN3103A: Financial Markets
Introduction to financial

CHAPTER
2-3
&
6-8
Introduction to
Financial Institutions
Chapters 1-2, from Fabozzi , Modigliani, and Jones
and
Chapter 1 from Saunders and Cornett by McGraw
Financial Institutions
Classification of Financial Institutions (FIs):
Financial intermediaries

Addition
al
reading
Introduction to financial
markets and financial
institutions:
Islamic financing
Slide 2
Spring 2013: FIN3103B: Financial Markets
Introduction to Islamic Banking
Muslim individuals are required to follow Shariah laws in
every aspect of

CHAPTER
1725
Interest rates
and debt market
Adopted from Fabozzi and Modigliani by Pearson and
Saunders and Cornett by Dr. Z. R. Huszar
Page:2
Slide 2
Debt market
Corporate debt (CD) market:
Spring 2014: FIN3103 - Financial Markets
1.Public
Debt
1.
Short

Learn how to get started with Dropbox:
1
2
3
4
Keep your
files safe
Take your stuff
anywhere
Send large
files
Work on files
together
Welcome to Dropbox!
home
1
Keep your files safe
Dropbox lets you save docs, photos, videos, and other files
all in one pl

Chapter 1
Exercises
1. Consider a person has an income of $20,000 at the current time and $20,000 at the
end of year 1. Draw a diagram showing consumption possibilities if r = 8%.
Consumption at time 0
0
C0
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1