All Matches

Solution Library

Expert Answer

Textbooks

Search Textbook questions, tutors and Books

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Tutors
Study Help
Ask a Question
AI Study Help New

Search
Sign In
Register

study help
business
financial markets institutions

Questions and Answers of Financial Markets Institutions

A financial institution has the following market value bal- ance sheet structure: (LG 19-1) Assets Liabilities and Equity Cash $ 1,000 Certificate of deposit $10,000 Bond 10,000 Equity 1,000 Total
Discuss the interrelationships among the different sources of FI risk exposure. Why would the construction of an FI risk management model to measure and manage only one type of risk be incomplete?
Why can insolvency risk be classified as a consequence or outcome of any or all of the other types of risks? (LG 19-2)
Characterize the risk exposure(s) of the following FI transac- tions by choosing one or more of the following: (LG 19-1)a. Credit riskb. Interest rate riskc. Off-balance-sheet riskd. Foreign exchange
Bank 1, with $130 million in assets and $20 million in costs, acquires Bank 2, which has $50 million in assets and $10 million in costs. After the acquisition, the bank has $180 million in assets and
What is the difference between technology risk and opera- tional risk? How does internationalizing the payments sys- tem among banks increase operational risk? (LG 19-1)
What is country or sovereign risk? What remedy does an FI realistically have in the event of a collapsing country or currency? (LG 19-1)
If you expect the Swiss franc to depreciate in the near future, would a U.S.-based FI in Basel, Switzerland, prefer to be net long or net short in its asset positions? Discuss. (LG 19-1)
A U.S. insurance company invests $1,000,000 in a private placement of British bonds. Each bond pays 300 in interest per year for 20 years. If the current exchange rate is 1.5612 for U.S.$1, what is
If an FI has the same amount of foreign assets and foreign liabilities in the same currency, has that FI necessarily reduced the risk involved in these international transactions to zero? Explain.
If the Swiss franc is expected to depreciate in the near future. would a U.S.-based FI in Bern City, Switzerland, prefer to be net long or net short in its asset positions? Discuss. (LG 19-1)
If international capital markets are well integrated and oper- ate efficiently, will banks be exposed to foreign exchange risk? What are the sources of foreign exchange risk for FIs? (LG 19-1)
What two factors provide potential benefits to FIs that expand their asset holdings and liability funding sources beyond their domestic borders? (LG 19-1)
What is foreign exchange risk? What does it mean for an FI to be net long in foreign assets? What does it mean for an FI to be net short in foreign assets? In each case, what must happen to the
What is the nature of an off-balance-sheet activity? How does an FI benefit from such activities? Identify the various risks that these activities generate for an FI, and explain how these risks can
A money market mutual fund bought $1,000,000 of two- year Treasury notes six months ago. During this time, the value of the securities has increased, but for tax reasons the mutual fund wants to
Consider again the two bonds in Question12.If the invest- ment goal is to leave the assets untouched until maturity. such as for a child's education or for one's retirement, which of the two bonds
Consider two bonds, a 10-year premium bond with a cou- pon rate higher than its required rate of return and a zero coupon bond that pays only a lump sum payment after 10 years with no interest over
Corporate bonds usually pay interest semiannually. If a company decided to change from semiannual to annual interest payments, how would this affect the bond's interest rate risk? (LG 19-1)
How does a policy of matching the maturities of assets and lia- bilities work (a) to minimize interest rate risk and (b) against the asset-transformation function for FIs? (LG 19-1)
How can interest rate risk adversely affect the economic or market value of an FI? (LG 19-1)
The sales literature of a mutual fund claims that the fund has no risk exposure since it invests exclusively in default risk-free federal government securities. Is this claim true? Why or why not?
What is reinvestment risk? How is reinvestment risk part of interest rate risk? If an FI funds short-term assets with long-term liabilities, what will be the impact on earnings of a decrease in the
What is refinancing risk? How is refinancing risk part of interest rate risk? If an FI funds long-term fixed-rate assets with short-term liabilities, what will be the impact on earn- ings of an
What is the process of asset transformation performed by a financial institution? Why does this process often lead to the creation of interest rate risk? What is interest rate risk? (LG 19-1)
What is liquidity risk? What routine operating factors allow FIs to deal with this risk in times of normal economic activ- ity? What market reality can create severe financial difficulty for an FI in
In the 1980s, many thrifts that failed had made loans to oil companies located in Louisiana, Texas, and Oklahoma. When oil prices fell, these companies, the regional economy, and the thrifts all
What is the difference between firm-specific credit risk and systematic credit risk? How can an FI alleviate firm-specific credit risk? (LG 19-1)
What is credit risk? Which types of FIs are more susceptible to this type of risk? Why? (LG 19-1)
Is the flow of funds into these two types of pension funds currently positive or negative? Why would these trends occur?
How has the flow of funds to defined benefit and defined contribution pension funds changed since 2010 as reported in Figure 18-2?
Using the information in Problem 6, and assuming all vari- ables remain constant over the next 25 years, what will your 401(k) fund value be in 25 years (when you expect to retire)? (LG 18-3)
Your company sponsors a 401(k) plan into which you deposit 12 percent of your $60,000 annual income. Your company matches 50 percent of the first 5 percent of your earnings. You expect the fund to
An employer uses a final pay formula to determine retire- ment payouts to its employees. The annual payout is 3 percent of the average salary over the employees' last three years of service times the
Retire Average Salary => Now $50,000 In 2 years 51,005 The Payment Will Be 50,000 x .05 x 20 = $50,000 51,005 x .05 x 22 = $56,105 In 5 years 52,551 52,551 x .05 x 25 = $65,688 In 8 years 54,143
cel Salary $60,000 62,500 64,000 Using a Spreadsheet to Calculate Pension Ben- efit Payments: Your employer uses a career aver- age formula to determine retirement payments to its employees. You have
An employer uses a career average formula to determine retirement payments to its employees. The annual retirement payout is 5 percent of the employees' career average salary times the number of
Your employer uses a flat benefit formula to determine retirement payments to its employees. The fund pays an annual benefit of $2,500 per year of service. Calculate your annual benefit payments for
Describe the major features of ERISA. (LG 18-5)
What was the motivation for the passage of ERISA? (LG 18-5)
How do the financial asset holdings of defined benefit pen- sion funds differ from those of defined contribution pension funds? Explain the differences. (LG 18-2)
What are the major assets held by private pension funds in 1975 versus 2010? Explain the differences. (LG 18-1)
Describe the different pension funds sponsored by the fed- eral government. (LG 18-4)
Describe the "pay as you go" funding method that is used by many federal and state or local government pension funds. What is the problem with this method that may damage the long-term viability of
What is the difference between an IRA and a Keogh account? (LG 18-3)
Describe the trend in assets invested in 401(k) plans in the 1990s and 2000s. (LG 18-3)
What have the trends been for assets invested in defined benefit versus defined contribution pension funds in the last two decades? (LG 18-2)
What are the three types of formulas used to determine pen- sion benefits for defined benefit pension funds? Describe each. (LG 18-2)
Describe the difference between a defined benefit pension fund and a defined contribution pension fund. (LG 18-2)
Describe the difference between an insured pension fund and a noninsured pension fund. What type of financial institutions would administer each of these? (LG 18-1)
Describe the difference between a private pension fund and a public pension fund. (LG 18-1)
How has each of these changed since 2010 as reported in Table 17-1?
What is the most recent value for Total Net Assets, Number of Funds, and Number of Shareholder Accounts?
Suppose an individual invests $10,000 in a load mutual fund for two years. The load fee entails an up-front com- mission charge of 4 percent of the amount invested and is deducted from the original
Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front com- mission charge of 2.5 percent of the amount invested and is deducted from the original
An investor purchases a mutual fund share for $100. The fund pays dividends of $3, distributes a capital gain of $4, and charges a fee of $2 when the fund is sold one year later for $105. What is the
A mutual fund has 400 shares of General Electric, currently trading at $16, and 400 shares of Microsoft, Inc., currently trad- ing at $28. The fund has 1,000 shares outstanding. (LG 17-4)a. What is
Open-end Fund A has 165 shares of ATT valued at $25 each and 50 shares of Toro valued at $45 each. Closed-end Fund B has 75 shares of ATT and 100 shares of Toro. Both funds have 1,000 shares
An investor purchases a mutual fund for $50. The fund pays dividends of $1.50, distributes a capital gain of $2, and charges a fee of $2 when the fund is sold one year later for $52.50. What is the
What is the difference between domestic hedge funds and offshore hedge funds? Describe the advantages of offshore hedge funds over domestic hedge funds. (LG 17-7)
What types of fees do hedge funds charge? (LG 17-7)
What are the different categories of hedge funds? (LG 17-7)
What is a hedge fund and how is it different from a mutual fund? (LG 17-7)
Discuss the improper trading abuses and improper assign- ment of fees for which mutual funds were prosecuted in the early 2000s. (LG 17-5)
Who are the primary regulators of the mutual fund indus- try? How do their regulatory goals differ from those of other types of financial institutions? (LG 17-5)
Why did the proportion of equities in long-term mutual funds increase from 38.3 percent in 1990 to 70.0 percent in 2007 and decrease back to 55.5 percent in 2008? How might an investor's preference
What is a 12b-1 fee? Suppose that you have a choice between two mutual funds, one a load fund with no annual 12b-1 fees, and the other a no-load fund with a maximum 12b-1 fee. How would the length of
How might an individual's preference for a mutual fund's objective change over time? (LG 17-3)
What is the difference between open-end and closed-end mutual funds? Which type tends to be more specialized? (LG 17-4)
How is the net asset value (NAV) of a mutual fund deter- mined? What is meant by the term marked-to-market daily? (LG 17-4)
What are the three components of the return that an investor receives from a mutual fund? (LG 17-4)
What change in regulatory guidelines occurred in 1998 that had the primary purpose of giving investors a better understanding of the risks and objectives of a mutual fund? (LG 17-3)
What are the principal demographics of household owners of mutual funds? (LG 17-2)
What are the economic reasons for the existence of mutual funds? (LG 17-1)
How does the risk of short-term funds differ from that of long-term funds? (LG 17-2)
Using the data in Table 17-3, discuss the growth and own- ership holdings over the last 30 years of long-term funds versus money market funds. (LG 17-2)
What are long-term mutual funds? In what assets do these funds usually invest? What factors caused the strong growth in this type of fund during the 1990s and the decline in growth in the early and
What are money market mutual funds? In what assets do these funds typically invest? What factors caused the strong growth in this type of fund from 1992 through 2007? (LG 17-2)
What benefits do mutual funds have for individual investors? (LG 17-1)
What is a mutual fund? In what sense is it a financial institu- tion? (LG 17-1)
How have these values changed since 2009 as reported in Table 15-8?
What are total revenues and assets of the top 10 life insurance companies? Property-casualty companies?
A property-casualty insurer brings in $6.25 million in pre- miums on its homeowners MP line of insurance. The line's losses amount to $4,343,750, expenses are $1,593,750, and dividends are $156,250.
An insurance company collected $3.6 million in premiums and disbursed $1.96 million in losses. Loss adjustment expenses amounted to 6.6 percent and dividends paid to pol- icyholders totaled 1.2
An insurance company's projected loss ratio is 77.5 percent, and its loss adjustment expense ratio is 12.9 percent. It esti- mates that commission payments and dividends to policy- holders will add
Calculate the following: (LG 15-6)a. If the simple loss ratio on a line of property insurance is 73 percent, the loss adjustment expense is 12.5 percent. and the ratio of commissions and other
a. Suppose a 65-year-old person wants to purchase an annu- ity from an insurance company that would pay $20,000 per year until the end of that person's life. The insurance company expects this person
You deposit $10,000 annually into a life insurance fund for the next 10 years, after which time you plan to retire. (LG 15-2)a. If the deposits are made at the beginning of the year and earn an
You deposit $10,000 annually into a life insurance fund for the next 10 years, at which time you plan to retire. Instead of a lump sum, you wish to receive annuities for the next 20 years. What is
Calculate the following: (LG 15-2)a. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1 million and the annuity earns a
Which of the insurance lines listed below will be charged a higher premium by insurance companies and why? (LG 15-6)a. Low-severity, high-frequency lines versus high-severity. low-frequency lines.b.
How do increases in unexpected inflation affect P&C insur- ers? (LG 15-5)
What are the three sources of underwriting risk in the P&C industry? (LG 15-5)
How have P&C industry product lines based on net premi- ums written by insurance companies changed over time? (LG 15-5)
What are the two major lines of property-casualty (P&C) insurance firms? (LG 15-5)
How do life insurance companies earn profits? (LG 15-3)
How do state guarantee funds for life insurance companies compare with deposit insurance for depository institutions? (LG 15-4)
How does the regulation of insurance companies compare with that of depository institutions? (LG 15-4)
If an insurance company decides to offer a corporate cus- tomer a private pension fund, how would this change the balance sheet of the insurance company? (LG 15-3)
How can you use life insurance and annuity products to cre- ate a steady stream of cash disbursements and payments so as to avoid either the payment or receipt of a single lump sum cash amount? (LG

Showing 3100 - 3200 of 5641

First
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Last

Services

Sitemap
Fun
Definitions
Become Tutor
Study Help Categories
Recent Questions
Expert Questions

Company Info

Security
Copyrights
Privacy Policy
Terms & Conditions
SolutionInn Fee
Scholarship

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Campus Ambassador

Secure Payment

Download Our App

© 2024 SolutionInn. All Rights Reserved