Question 1:
a)
What is the no arbitrage forward price of bond D? To solve, need to figure out the
forward rates f10,1, f10,2 and f10,3. Given the data in the table provided:
Can determine f10,1 using the information provided for bond A:
1000
1000(1.1)
1 f

Assignment 1
1. Suppose that you are interested in purchasing a T-Bill that matures in 217 days and is quoted by a dealer at 8.29%. What is the
price per $10,000 face value? What is the effective annual yield?
2. You currently own a T-Bill that will matur

Assignment 1
1. Suppose that you are interested in purchasing a T-Bill that matures in 217 days and is quoted by a dealer at
8.29%. What is the price per $10,000 face value? What is the effective annual yield?
2. You currently own a T-Bill that will matur

ID
Gender 671 F 325 M 155 F 994 M 936 M 73 M 613 M 312 F 363 M 952 M 857 M 736 M 783 M 852 M 27 M 242 M 144 M 383 M 37 F 242 M 388 F 359 F 859 M 716 M 624 M 983 M 771 F 156 F 337 M 649 M 366 F 270 F 636 M 722 M 684 M 455 F 314 M 511 M 678 M 429 F 367 M 12

Assignment 1
1. Suppose that you are interested in purchasing a T-Bill that matures in 217 days and is quoted by a dealer at 8.29%. What is the
price per $10,000 face value? What is the effective annual yield?
2. You currently own a T-Bill that will matur

Capital Markets and Institutions
Assignment 1
Discussion Questions
1. Interpreting Financial News tests your ability to comprehend common statements made by Wall Street analysts and portfolio
managers who participate in the financial markets. Interpret th

Capital Markets and Institutions
Assignment 1
Discussion Questions
1. Interpreting Financial News tests your ability to comprehend common statements made by Wall Street analysts and portfolio
managers who participate in the financial markets. Interpret th

Assignment 2
1. Compute the present value of a two-period annuity of $1 per period if the discount rate is 10 percent.
2. A two-period annuity of $1 per period has a present value of $1.808. Find the discount rate from the
present value table.
3. An annui

Assignment 2
1. A two-period annuity of $1 per period has a present value of $1.808. Find the discount rate from the
present value table.
2. An annuity of $1 period runs from time 9 through time 13. The annuity has a present value of $2.3.
Find the yield

Assignment 2
1. Compute the present value of a two-period annuity of $1 per period if the discount rate is 10 percent.
2. A two-period annuity of $1 per period has a present value of $1.808. Find the discount rate from the
present value table.
3. An annui

MGSC 372
Fall 2012
Assignment 1 Prof. B. Smith Due Oct 4, 2011 A small private college does a yearly study of its faculty's salaries. Information on gender, department, years at the school, beginning salary, current salary, and an "experience" variable ar

Capital Markets and Institutions
Solution to Assignment 1
Discussion Questions
1. a. High economic growth encourages expansion by firms, which results in a strong demand for loans
provided by Bank of America.
b. High economic growth may result in a large

McGill University
Desautels Faculty of Management
FINE 448: Bcom Derivatives CLOSED BOOK Test I VERSION 1 KEY Winter/2012 Maximum Points: 50 Time: 120 minutes Last Name: _ First Name: _ Student#: _ Class Time: _
This is a closed book examination. You are

Additional Questions from the Mishkin & Eakins Book
These are the questions that I select because they are consistent with: (1) the content of
the course; (2) its level of di culty
Why Do Financial Institutions Exist?
Question
5. Do you think the lemons p

1) Why might a bank be willing to borrow funds from other banks at a higher rate than it can
borrow from the central bank?
When a bank borrows from the Fed it often has to put forward collateral. Borrowing in an interbank market may be accomplished on an

Term Structure
Explaining TS
Determinants of Interest Rate
1
1. Definition & Uses TS
Definition of TS
Relationship between the YTM on ZCB and
time to maturity
Uses
Pricing bond, loan, mortgage
Forecasting interest rate, inflation, exchange
rates, default

Answers to Chapter 10
Questions:
1. A derivative security is a financial security whose payoff is linked to another, previously issued security.
Derivative securities generally involve an agreement between two parties to exchange a standard quantity of an

2.
2 Capital Markets
Quizz: Primary vs secondary markets
Some of your friends claim that the primary
y
p
y
market is more important than the secondary
market b
k t because thi i where corporations raise
this is h
ti
i
funds.
Do you agree?
2.
2 Capital M

STUDENT NAME: _
(Please Print Clearly)
STUDENT NUMBER: _
McGill University
Desautels Faculty of Management
MID-TERM EXAMINATION
Professor Larbi Hammami
INSTRUCTIONS:
1.
Write your name and student number in the space provided above.
2.
Please outline solu

Solutions to Midterm Exam
1. Multiple Choice[10 marks-1 mark each]
1d
2c
3c
4d
5c
6d
7a
8c
9b
10a
Questions
1. a.[2 marks] The PLL account is forward looking; it is management's estimate of the loans that will
default in the upcoming period. The PLL is us

Performance Valuation :
Finance
Insurance
Investment Banking and
Securities
Mutual Funds
Pension Funds
1. Finance Companies
They are like banks.
Make loans
They dont accept
They are unlike banks .
deposits
They obtain funding .issuing CP
By
and Bonds
Prof

Central Bank
Functions
Basic Operations
Art of Conducting a Monetary Policy
Money Creation thru Banking System
1
1. Functions
Provide $ to banks in order to meet unexpected
withdrawals
prevent bank run and increase public confidence
Supervise all banks
e

STUDENT NAME: _
Please Print
STUDENT NUMBER: _
McGILL UNIVERSITY
Desautels Faculty of Management
FINAL EXAMINATION
Professor Larbi Hammami
INSTRUCTIONS:
1.
2.
3.
4.
Write your name and student number in the space provided above.
This is a closed book exam

Financial System
Financial Institutions
Money Market
Capital Market
1
1.Overview of the Financial System
Financial Ins.
Demanders
Suppliers of
funds
of funds
Financial Mkts
2
Examples
Loan from a bank
Buy a share from your uncle
Buy life insurance
3
2. Cl

Profitability of Depository Institution
The Bank Financial Statements
Objective of the Bank
Profitability Valuation
1
1. Balance Sheet Summary
Liabilities
Demand Deposits(Checking acct )
5-10%
Savings and Notice Deposits
10-15
Term Deposits(CD, GIC.)
40-4

Assignment 3
1. Why might a bank be willing to borrow funds from other banks at a higher rate than it can borrow from
the Central Bank?
2. Rank the following bank assets from most to least liquid:
a. Commercial loans
b. Securities
c. Reserves
d. Physical

Credit Risk
Foreign Currency Risk
Capital Adequacy
Loan Sales
Securitization
1
1.Credit Risk - Loan Portfolio
Most important risk for Lending FIs
high probability of limited upside payoff
plus
low probability of large loss.
2
Simple observations on Credit

Credit Risk
Foreign Currency Risk
Capital Adequacy
Loan Sales
Securitization
1
1.Credit Risk - Loan Portfolio
Most important risk for Lending FIs
high probability of limited upside payoff
plus
low probability of large loss.
2
Simple observations on Credit

McGill University
Desautels Faculty of Management
Final Examination
Practice Final4
Derivatives
Examine
r:
Assoc
Examiner:
Student
Name:
McGill
ID:
INSTRUCTIONS:
This is a CLOSED BOOK examination.
FORMULA SHEET AND SCRATCH SPACE are provided separately

McGill University
Desautels Faculty of Management
Derivatives
CLOSED BOOK Practice Final3 KEY
Maximum Points: 100 Time: 180 minutes
Last Name: _
First Name: _
Student#: _
This is a closed book examination. You are allowed to use a calculator and a languag

Students Name: _ Students ID: _
McGill University DERIVAssignment#1 KEY Maximum Points: 25
HAND IN (NO
EMAILING) THIS ASSIGNMENT. NO OTHER FORM OF ASSIGNMENT SUBMISSION WILL BE
ACCEPTED OR GRADED. SHOW REASONABLE DETAILS OF CALCULATIONS. ELSE, NO CREDIT M

NAME:_
McGill University Derivatives Practice Quiz Set 3 Quiz 1A
Max Pts: 25 Time: 35 minutes
NO CREDIT FOR A QUESTION IF REASONBALE AMOUNT OF WORK IS NOT SHOWN.
_
FORMULA SHEET
Futures Hedging
Full Long Hedge: All-In-price (Cost) =S2 (F2 F1) = S2+ (F1 F2

NAME:_
McGill University Derivatives Practice Quiz Set #4 Quiz 1A KEY
Max Pts: 25 Time: 40 minutes
NO CREDIT FOR A QUESTION IF REASONBALE AMOUNT OF WORK IS NOT SHOWN.
_
FORMULA SHEET
Futures Hedging
Full Long Hedge: All-In-price (Cost) =S2 (F2 F1) = S2+ (