Provide your answers in the space provided.

Any quantitative questions require showing your work for full credit.

Round all $ problems to the nearest cent.

All other calculations must be to at least the fifth decimal place.

Given the following information: (all numbers are in millions)

Variable rate CD’s = $90 Treasury bills = $150

Discount Loans = $20 Treasury notes = $100

Fixed rate CDs =$160 Money Market deposit accts. = $140

Savings deposits =$90 Fed Funds borrowing = $40

Variable rate mortgage loans = $140 Demand Deposits = $40

Primary Reserves = $50 Fixed rate loans =$210

Fed Funds Lending = $50 Equity Capital = $120

A. Develop a balance sheet from the above data. Be sure to divide your balance sheet into rate-sensitive assets and liabilities as

   we did in class and in the examples.

B. Perform a Standard Gap Analysis and a Duration Analysis using the above data if you have a 1.15% decrease in interest rates

   and an average duration of assets of 5.4 years and an average duration of liabilities of 3.8 years.

C. Indicate if this bank will remain solvent after the valuation changes. If so, indicate the new level of equity capital after the

   valuation changes. If not, indicate the amount of the shortage in equity capital.

You will be paying $10,800 a year in tuition expenses at the end of the next two years. Bonds currently yield 9%.

a. What is the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.)

b. What is the duration of a zero-coupon bond that would immunize your obligation and its future redemption value? (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Future redemption value" to 2 decimal places.)

You buy a zero-coupon bond with value and duration equal to your obligation.

c-1. Now suppose that rates immediately increase to 10%. What happens to your net position, that is, to the difference between the value of the bond and that of your tuition obligation? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Net position changes by            $

c-2. What if rates fall to 8%? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Net position changes by            $

Exercise 4:

Consider an Australian financial institution which has Swiss Franc denominated assets worth 50 million CHF and USD denominated liabilities worth 1 million USD. The past exchange rates in over the past 10 months are:

a) Measure the exposure: Calculate the value of the position in AUD.

b) Measure the sensitivity: Calculate the change (in AUD) in the CHF position for a 1% increase in the value of the Swiss Franc. Calculate the change (in AUD) in the USD position for a 1% increase in the value of the USD.

c) Calculate the past changes in the exchange rate in %.
d) Re-evaluate the portfolio position with the past changes in the exchange rate. e) Calculate the Value at Risk for the next month and α = 10%
f) Calculate the Value at Risk for the next month and α = 20%

A new drug called Xaelenfal is on the market. Xaelenfal is an AMPA receptor antagonist, meaning that it binds onto AMPA receptors without activating them and prevents glutamate from binding.

i. If I take the drug Xaelenfal, how will this effect EPSPs recorded in the postsynaptic neuron when an excitatory presynaptic neuron fires an action potential? (1 point)

ii. How will the drug Xaelenfal effect IPSPs in the postsynaptic neuron when an inhibitory presynaptic neuron fires an action potential? (1 point)

iii. In a normal brain, synapses can get stronger when a presynaptic cell repeatedly causes a postsynaptic cell to depolarize (we call this long-term potentiation, or LTP). Explain how long term potentiation works including the following details. (3 points)
- Name the neurotransmitter that is released by the presynaptic cell.
- Name the receptor that this neurotransmitter binds to on the postsynaptic cell to mediate normal excitatory transmission.
- What other receptors are involved and how do they get recruited?
- List one way in which the presynaptic neuron changes and one way in which the postsynaptic neuron changes during LTP.

iv. Given what you know about plasticity, could Xaelenfal effect the ability of synapses to potentiate. Explain your answer. (2 points)

You will be paying $10,500 a year in tuition expenses at the end of the next two years. Bonds currently yield 8%. a. What is the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.) Present value $ Duration years b. What is the duration of a zero-coupon bond that would immunize your obligation and its future redemption value? (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Future redemption value" to 2 decimal places.) Duration years Future redemption value $ You buy a zero-coupon bond with value and duration equal to your obligation. c-1. Now suppose that rates immediately increase to 9%. What happens to your net position, that is, to the difference between the value of the bond and that of your tuition obligation? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.) Net position changes by $ c-2. What if rates fall to 7%? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.) Net position changes by $

Multiple Choice

1. Which of the following statements is true regarding investment in equity instruments by choosing to apply the FVOCI option (fair value through other comprehensive income)

1. Everything is correct
2. Subject to the rules for impairment of PSAK 71 / IFRS 9
3. Can be reclassified to FVTPL (fair value through profit or loss)
4. Profits or losses recognized in OCI cannot be recycled to profit or loss

2. Which classification is appropriate for the following financial assets: “A financial asset that is managed in a business model whose purpose would be fulfilled by obtaining contractual cash flows and selling the financial asset and the contractual terms of the financial asset entitling a specific date to cash flows that are solely the principal payment. and interest on the principal outstanding ":

1. Financial assets are measured at fair value through profit or loss
2. Financial assets are measured at cost
3. Financial assets are measured at fair value through other comprehensive income
4. Financial assets are measured at amortized cost

3. Which is the most appropriate statement:

1. Financial assets cannot be reclassified
2. Financial liabilities can be reclassified if, and only if, the entity's business model changes
3. Financial assets and financial liabilities cannot be reclassified
4. Financial assets can be reclassified if, and only if, the entity changes its business model for managing the financial assets.

What does Kohl’s 2015 10-K communicate about its stockholders’ equity?
Kohl’s Corporation (KSS) operates department stores in 49 states in the U.S. and has annual sales in excess of $18 billion. Its fiscal year ends on the Saturday closest to January 31 each year. Kohl’s has several line items comprising its stockholder’s equity. See the experts to follow from Kohl’s 2015 Form 10-K: its Consolidated Balance Sheets, an enlarged partial Consolidated Balance Sheet (page F-3), its Consolidated Statements of Changes in Shareholders’ Equity (page F-5), and a section from its Notes to Financial Statements (page F-8).

• Discuss the reasoning for the decision behind Kohl’s fiscal year ending “the Saturday closest to January 31 each year”.
• Discuss the types and number of shares of stock Kohl’s is authorized to issue.
• Discuss the number of shares of common stock issued and outstanding and any changes in the amount throughout the year.
• Discuss the affect treasury stock has on total contributed capital. Whis is it subtracted out?
• Discuss whether or not Kohl’s accumulated earnings to date exceeded its accumulated losses and dividends declared to date. How do you know?

1.Potatoes are available in the United States and in Mexico. Income has risen by 10 percent in each country. The demand for potatoes has increased by 2 percent in the United States and by 17 percent in Mexico. What can be concluded?

A. Potatoes are normal goods in both countrie

B. Potatoes are normal goods in the United States but inferior goods in Mexico.

C. Potatoes are inferior goods in the United States but normal goods in Mexico.

D. Potatoes are inferior goods in both countries.

2.Beer and pretzels are complements. There is a decrease in the supply of beer. What would we expect to see?

A. An increase in the price of beer and an increase in the demand for pretzels

B. An increase in the price of beer and a decrease in the demand for pretzels

C. A decrease in the price of beer and an increase in the demand for pretzels

D. A decrease in the price of beer and a decrease in the demand for pretzels

3.Which of the following is true of the movement along a demand curve?

A. Changes in price on quantity demanded do not take the form of a movement along the demand curve

B. The effect of a change in price on quantity demanded takes the form of a movement along the demand curve.

C. The shift of any “other” variables does not constitute movement along a demand curve.

D. Changes in income do not take the form of a movement along the demand curve

You will be paying $10,200 a year in tuition expenses at the end of the next two years. Bonds currently yield 9%. a. What is the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.) Present value $ Duration years b. What is the duration of a zero-coupon bond that would immunize your obligation and its future redemption value? (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Future redemption value" to 2 decimal places.) Duration years Future redemption value $ You buy a zero-coupon bond with value and duration equal to your obligation. c-1. Now suppose that rates immediately increase to 10%. What happens to your net position, that is, to the difference between the value of the bond and that of your tuition obligation? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.) Net position changes by $ c-2. What if rates fall to 8%? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.) Net position changes by $