Business Archives - Page 130 of 523

Would you characterize the U.S. dollar as a freely floating or dirty float system? What characteristics support your answer? What is direct central bank intervention in the currency markets? Provide an example of this from the last 50 years.

September 17, 2022/in Business /by Sam

Answer the following questions on a separate document.

Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link.

Would you characterize the U.S. dollar as a freely floating or dirty float system? What characteristics support your answer?
What is direct central bank intervention in the currency markets? Provide an example of this from the last 50 years.
Assume that Canada suddenly experiences high inflation. How might this affect the value of the Canadian dollar according to the purchasing power parity (PPP) theory?
Australia’s central bank decides to increase the value of the Australian dollar against the Japanese yen. How might it use direct intervention to do this?
Assume the following information: i. Mexican one-year interest rate = 15 percent ii. U.S. one-year interest rate = 11 percent iii. If interest rate parity exists, what would be the forward premium or discount on the Mexican peso’s forward rate? Would covered interest arbitrage be more profitable to U.S. investors than investing at home? Explain.
Create a balance sheet for a typical bank, showing its main liabilities (sources of funds) and assets (uses of funds).
The Federal Reserve has increasingly favored the use of Repurchase Agreements as part of its open market operations. Briefly describe these and why the Fed or banks prefer to use them.
Banks engage in proprietary trading as part of their operations. Briefly speculate on why they now must adhere to more stringent trading activity as a result of the 2008-09 financial crises.
Briefly describe two off-balance-sheet activities and why banks favor the use of these.
If you were the CEO of a US bank, would you consider establishing a foreign branch? What might be a concern related to doing so?

Identify the primary objectives of the Federal Open Market Committee and the means by which it attempts to achieve these objectives. What is the Beige Book and why do market participants pay attention to it?

September 17, 2022/in Business /by Sam

Answer the following questions on a separate document.

Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link.

Assume that as of today, the annualized interest rate on a three-year security is 8 percent, while the annualized interest rate on a two-year security is 6 percent. Use only this information to estimate the one-year forward rate two years from now.
You need to choose between investing in a one-year municipal bond with a 6 percent yield and a one-year corporate bond with a 9 percent yield. If your marginal federal income tax rate is 20 percent and no other differences exist between these two securities, which one would you invest in?
Assume that interest rates for one-year securities are expected to be 3 percent today, 6 percent one year from now, and 7 percent two years from now. Using only the pure expectations theory, what are the current interest rates on two-year and three-year securities?
Identify some factors that influence the shape of the yield curve. Describe how financial market participants use the yield curve to make decisions.
Assume there is a sudden expectation of increasing interest rates in the future. What would be the effect on the shape of the interest curve? Explain.
Identify the primary objectives of the Federal Open Market Committee and the means by which it attempts to achieve these objectives.
What is the Beige Book and why do market participants pay attention to it?
Is it the role of the Fed or Congress to determine the fate of large financial institutions that are near bankruptcy?
Does the Federal Reserve directly or indirectly influence equity security prices? Based on your response, do equity market participants focus on current Fed actions or the expected ones when it comes to pricing equity securities?
Visit the Consumer Financial Protection Bureau’s website. Identify one policy objective and its effects on consumers and businesses.

Describe an economic trade-off faced by the Fed in achieving its economic policy objectives. What are recognition and implementation lags? How do these influence security prices?

September 17, 2022/in Business /by Sam

Answer the following questions on a separate document.

Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link.

Describe an economic trade-off faced by the Fed in achieving its economic policy objectives.
What are recognition and implementation lags? How do these influence security prices?
Why might the Fed’s monetary policy depend on the fiscal policy that is implemented?
Stock market conditions serve as a leading economic indicator. Assuming the U.S. economy is in an expansion, what are the implications of this indicator? Why might this indicator be inaccurate?
Assess the economic situation today. Is the current administration more concerned with reducing unemployment or inflation? Does the Fed have a similar opinion? If not, is the administration publicly criticizing the Fed? Is the Fed publicly criticizing the administration? Explain.
What type of organization issues commercial paper? Given the short-term nature of commercial paper, why would ratings agencies assign ratings to them?
The maximum maturity of commercial paper is 270 days. Why would an organization issue commercial paper rather than longer-term securities, even if it needs funds for a long period of time?
Assume an investor purchased a three-month T-bill with a $10,000 par value for $9,500 and sold it 45 days later for $9,600. What is the yield?
A money market security that has a par value of $10,000 sells for $8,924.70. Given that the security has a maturity of two years, what is the investor’s required rate of return?
A U.S. investor obtains British pounds when the pound is worth $1.30 and invests in a one-year money market security that provides a yield of 4 percent (in pounds). At the end of one year, the investor converts the proceeds from the investment back to dollars at the prevailing spot rate of $1.32 per pound. Calculate the effective yield.

Briefly differentiate between a commercial bank and a consumer finance company. What is the most significant difference between these two? Identify one of the significant risks finance companies face. Why is this risk important to monitor?

September 17, 2022/in Business /by Sam

Answer the following questions on a separate document.

Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link.

Briefly differentiate between a commercial bank and a consumer finance company. What is the most significant difference between these two?
Identify one of the significant risks finance companies face. Why is this risk important to monitor?
Select one factor that affects cash flows for a finance company valuation. Why is this factor significant for its operations?
Select one factor that affects the required rate of return for investors in finance companies. Why is this factor significant for investors?
Speculate on why you think a finance company is in a better position to offer credit cards than a commercial bank.
What is Net Asset Value (NAV) per share and what is the basic means used to determine its value?
Identify one expense of a mutual fund and briefly explain why management charges this fee. Why might investors be concerned with this fee?
In what way does a change in the risk-free rate affect a bond mutual fund?
Based on your understanding of mutual funds, would you favor a mutual fund of mutual funds or not? Why?
Briefly differentiate an exchange-traded fund from a mutual fund. Which would you select and why?

Identify two reasons for the existence of different valuations produced by the Price-Earnings Method. Which would you use and why? Briefly distinguish each of the three forms of market efficiency from each other. Which do you think best represents US markets?

September 17, 2022/in Business /by Sam

Answer the following questions on a separate document.

Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link.

Identify two reasons for the existence of different valuations produced by the Price-Earnings Method. Which would you use and why?
Briefly distinguish each of the three forms of market efficiency from each other. Which do you think best represents US markets?
Stock ABC has a beta of 1.5, a risk-free rate of 2.5 percent, and a market return of 7.5 percent. What is the expected return for this stock?
Company QRS just paid a dividend of $0.75. It is expected this dividend will grow at a constant rate of 4 percent indefinitely. What is the price of this stock if the required return is 10 percent?
You make the following investments in stocks: $5,000 in GE, $7,000 in BA, and $8,000 in XON. The betas for the stocks are GE: 1.05; BA: 0.97, and XON: 1.24. What is the portfolio beta?

Why would a bank be interested in a long hedge?
Briefly describe the characteristics of a single stock future. What type of investor might be interested in this?

You decided to buy Treasury bill futures contracts with a quoted price was 96-50. When you close this position, the quoted price was 95-25. Determine the profit or loss per contract, ignoring transaction costs.
You decided to sell Treasury bill futures contracts with a quoted price was 92-50. When you close this position, the quoted price was 91-75. Determine the profit or loss per contract, ignoring transaction costs.
You sell S&P 500 stock index futures that specified an index of 1,725. When you close this position, the index specified by the futures contract was 1,815. Determine the profit or loss, ignoring transaction costs.