Question

In: Finance

15. An instrument issued by the bank for which a bank guarantees an interest rate over...

15. An instrument issued by the bank for which a bank guarantees an interest rate over a defined period of time negotiated with a large investor, that may then be traded on a secondary market is a(n):

a. repurchase agreement b. negotiated CD (NCD) c. banker’s acceptance d. commercial paper

16. A short-term, unsecured, promissory note issued by prime rated firms is:

a. repurchase agreement b. negotiated CD c. banker’s acceptance d. commercial paper

17. Among Thrift Institutions

a. Savings and Loans are the largest in both number and total asset value

b. Credit Unions are the largest in both number and total asset value

c. Banks are the largest in both number and total asset value

d. Insurance companies are the largest in both number and total asset value.

18. Explain how Credit Unions are different than most depository institutions:

19. Which agency is a major regulator of Thrifts?

20. An investor sells 1,000 shares of IBM through Merrill Lynch – is this a primary or secondary market transaction?

21. Which of the following securities are issued by Banks: Treasury Bills, NCDs, Repos, Commercial Paper, Acceptances

Expert Solution

Answer:

15. b. negotiated CD (NCD)

16. d. commercial paper

17. a. Savings and Loans are the largest in both number and total asset value

18. Credit Unions work as not-for-profit foundations, as compared to other depository institutions. All income are held as capital or returned back to its members as interest or lower interest loans. Also, credit unions do not issue capital stock, it creates its net worth by retained earnings. In credit unions, each member is assigned one vote irrespective of the deposits made by them, while in other institutions voting rights are assigned according to the amount of deposits made by the members.

19. Office of Thrift Supervision (OTS) is a US agency which is a major regulator of Thrifts.

20. It is a secondary market because in primary market, the purchase is made from the issuing company. And here, in the question, investors exchange with each other rather than the issuing company.

21. Acceptances
Treasury bills are issued by government, NCDs are issued by various corporate and non-corporate sectors, commercial paper is also issued by corporates where acceptances are issued by banks.

jeff jeffy answered 2 years ago

Consider an economy in which the central bank uses the interest rate as its policy instrument....

Consider an economy in which the central bank uses the interest rate as its policy instrument. The policy-makers judge that the unemployment rate is too high and decide to pursue expansionary monetary policy to raise the output level. a. Illustrate and explain how expansionary monetary policy is expected to raise the output level. How would components of aggregate demand be affected by this policy? b. What are the limitations of expansionary monetary policy? What are the options available to the...

Which of the following is a security issue in which the investment bank guarantees the issuer...

Which of the following is a security issue in which the investment bank guarantees the issuer a price for newly issued securities by buying the whole issue at a fixed price from the security issuer, and where the investment bank then seeks to resell the securities to investors at a higher price? Best efforts underwriting, Venture capital, Underwriter's spread Firm commitment underwriting

The interest rates (in percent) on a Huntington Bank automobile loan over the last 15 months...

The interest rates (in percent) on a Huntington Bank automobile loan over the last 15 months were as follows: 1.8, 2.3, 1.6, 2.7, 2.1, 2.9, 3.6, 2.4, 1.9, 2.6, 1.4, 3.4, 2.3, 2.5, 2.2 Calculate the following descriptive statistics for these data. NOTE: Double-check your data entry. A substantial number of points will be lost if you are not working with the correct data values!!! a. Mean: (report your answer to 2 decimal places, using conventional rounding rules) b. Median:...

The interest rate is 13% while the expected inflation rate is 15%. Which of the following...

The interest rate is 13% while the expected inflation rate is 15%. Which of the following is true regarding this observation? ____ A) The real interest rate is roughly 2% B) The lender earns 13% interest at the expense of the borrower from a loan C) The borrower is subsidized by the lender in a loan D) None of the above

Pedrollo Pumps has issued a bond which has a $1,000 par value and a 15 percent annual coupon interest rate.

Pedrollo Pumps has issued a bond which has a $1,000 par value and a 15 percent annual coupon interest rate. The bond will mature in twenty years and currently sells for $1,250.Required:a) Using the approximation formula, calculate the yield to maturity (YTM)b) Calculate the current yield of Pedrollo bonds.

Select a company in which you are interested and identify a debt instrument issued by this...

Select a company in which you are interested and identify a debt instrument issued by this company by reviewing the Wall Street Journal Online or Yahoo Finance. Describe various components of the bond, such as current price, term to maturity, coupon rate, and par value. Calculate the current yield of the bond based on the information you have identified. I would like the company to be amazon, please. Could you help me figure out the current price, term to maturity,...

Paul takes a loan of $225,000 from the bank at 7% interest rate per year over...

Paul takes a loan of $225,000 from the bank at 7% interest rate per year over a 10-year period. He plans to pay off the loan in 10 yearly payments of $16,000 each, and with the money that he is going to inherit from his grand parents. How much should he inherit to pay off the entire loan if the grand parents give him the money at the end of the 4th year and he hands over the entire amount...

Q1/ You deposit $1 into a bank account which credits interest at a nominal interest rate...

Q1/ You deposit $1 into a bank account which credits interest at a nominal interest rate of 10% per annum, convertible semiannually. At the same time, your classmate deposits $1000 into a different bank account, which is credited with simple interest. At the end of 5 years, the forces of interest on the two accounts are equal, and your classmate’s account has accumulated to Z . Determine Z. (A) 1800 (B) 1854 (C) 1900 (D) 1953 (E) 2000 Q2/ You...

Madison Manufacturing has just issued a 15-year, 12% coupon interest rate, $1,000-par bond that pays interest...

Madison Manufacturing has just issued a 15-year, 12% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 11%, and the company is certain it will remain at 11% until the bond matures in 15 years. Assuming that the required return does remain at 14% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, and (6) 1 year to maturity. Plot your...

Pecos Manufacturing has just issued a 15-year, 11% coupon interest rate, 1,000-par bond that pays interest...

Pecos Manufacturing has just issued a 15-year, 11% coupon interest rate, 1,000-par bond that pays interest annually. The required return is currently 18%, and the company is certain it will remain at 18% until the bond matures in 15 years. a. Assuming that the required return does remain at 18% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity. .