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
Hire a Tutor
AI Study Help New

Search
Sign In
Register

study help
business
natural resource economics

Questions and Answers of Natural Resource Economics

3. The shares of Misheak, Inc., are expected to generate the following possible returns over the next 12 months:Return (%) Probability –5 .10 5 .25 10 .30 15 .25 25 .10If the stock is currently
2. Two common statistics in IPOs are underpricing and money left on the table. Underpricing is defined as percentage change between the offering price and the first-day closing price. Money left on
1. If the investment bankers retained per share as fees, what were the net proceeds to eBay? What was the market capitalization of the new shares of eBay?
6. Review the list of firms now included in the Dow Jones Industrial Average listed in Table 13.3 . How many firms appear to be technology related? Discuss what this means in terms of the risk of the
5. It is not uncommon for weather conditions to affect harvests differently across the world. How can you incorporate this information if you are a specialist in trading stock of food manufacturing
4. What is the National Association of Securities Dealers Automated Quotation System (NASDAQ)?
3. Discuss the benefits and potential risks of using the SDBK system in organized exchanges.
2. Identify the cash flows available to an investor in stock. How reliably can these cash flows be estimated? Compare the problem of estimating stock cash flows to estimating bond cash flows. Which
1. What basic principle of finance can be applied to the valuation of any investment asset?
1. Stocks tend to get more publicity than bonds, but many investors, especially those nearing or in retirement, find that bonds are more consistent with their risk preferences. Go to http://
14. Your company owns the following bonds:Bond Market Value Duration A million 2 B million 4 C million 3 If general interest rates rise from 8% to 8.5%, what is the approximate change in the value of
13. A corporate bond sells at par and has a current yield equal to 5.625%. Another bond sells for , has a face value of , and has a coupon rate equal to 5.5%. Which bond has a higher yield to
12. A one-year discount bond with a face value of was purchased for . What is the yield to maturity? What is the yield on a discount basis? (See Chapters 3 and 12 .)
11. A corporate bond with an 8.625% coupon rate sells above par. Is the current yield higher, lower, or equal to the coupon rate? Is the current yield higher, lower, or equal to the yield to maturity?
10. Consider two face-value corporate bonds. One is currently selling for and matures in 15 years. The other bond sells for and matures in 3 years. Calculate the current yield for both bonds if both
9. Assume the debt in the previous question is trading at . How can you earn a riskless profit from this situation (arbitrage)?
8. M&E, Inc., has an outstanding convertible bond. The bond can be converted into 20 shares of common equity (currently trading at ). The bond has five years of remaining maturity, a par value, and a
7. Suppose a municipal bond offers a yield to maturity of 5% and a same maturity corporate bond offers a 4% yield. For which values of the marginal tax rate would an investor prefer to buy the
5. Consider the following cash flows. All market interest rates are 12%.a. What price would you pay for these cash flows? What total wealth do you expect after 2.5 years if you sell the rights to the
4. A two-year $1,000 par zero-coupon bond is currently priced at $819.00. A two-year $1,000 annuity is currently priced at $1, 712.52. If you want to invest $50,000 in one of the two securities,
3. Consider the two bonds described below:a. If both bonds had a required return of 8%, what would the bonds' prices be? b. Describe what it means if a bond sells at a discount, at a premium, and at
2. Calculate the price of a bond that matures in 8 years, has a face value of $5,000, and has a coupon rate of 2% (paid semiannually) if the market interest rate is 1%. What is the price of the bond
1. A bond makes an annual $80 interest payment (8% coupon). The bond has five years before it matures, at which time it will pay $1,000. Assuming a discount rate of 10%, what should be the price of
11. Describe the two ways whereby capital market securities pass from the issuer to the public.
10. Why do you think that all companies that trade securities are required to be members of FINRA?
9. What is a sinking fund? Do investors like bonds that contain this feature? Why?
8. A call provision on a bond allows the issuer to redeem the bond at will. Investors do not like call provisions and so require higher interest on callable bonds. Why do issuers continue to issue
7. Explain how the creation of TRACE relates to asymmetric information problems in the bond markets.
6. As interest rates in the market change over time, the market price of bonds rises and falls. The change in the value of bonds due to changes in interest rates is a risk incurred by bond investors.
5. The U.S. Treasury issues bills, notes, and bonds. How do these three securities differ?
4. Does it seem right to you that one could buy insurance on anyone who looks unhealthy? Why?
3. What two characteristics make bonds a more popular long-term alternative to investing in stocks?
2. What are the primary capital market securities, and who are the primary purchasers of these securities?
1. Contrast investors’ use of capital markets with their use of money markets.
2. The Treasury conducts auctions of money market treasury securities at regular intervals. Go to http://treasurydirect.gov/ instit/instit.htm?upcoming and locate the schedule of auctions. When is
1. Up-to-date interest rates are available from the Federal Reserve at http://www.federalreserve.gov/releases. Locate the current rate on the following securities: a. Prime rate b. Federal funds c.
12. If the Treasury also received million in noncompetitive bids, who will receive T-bills, in what quantity, and at what price? (Refer to the table in problem 11.)
11. In a Treasury auction of billion par value 91-day T-bills, the following bids were submitted:If only these competitive bids are received, who will receive Tbills, in what quantity, and at what
10. The annualized yield is 3% for 91-day commercial paper and 3.5% for 182-day commercial paper. What is the expected 91-day commercial paper rate 91 days from now?
9. The annualized discount rate on a particular money market instrument is 3.75%. The face value is , and it matures in 51 days. What is its price? What would be the price if it had 71 days to
8. A commercial paper issued by CMF Corp. matures in 182 days and sells for . The investment rate on same maturity T-bills is currently 0.1%. Would you state that commercial paper issued by CMF Corp.
7. The price of face value commercial paper is . If the annualized discount rate is 4%, when will the paper mature? If the annualized investment rate is 4%, when will the paper mature?
6. Your minimum discount rate bid of 0.35% for a T-bill that matures in 91 days has been accepted. Calculate your annualized investment rate.
5. The price of 182-day commercial paper is . If the annualized investment rate is 4.093%, what will the paper pay at maturity?
4. What is the minimum discount rate you will accept if you want to earn at least a 0.25% annualized investment rate on a 182-day T-bill?
3. If you want to earn an annualized discount rate of 3.5%, what is the most you can pay for a 91-day Treasury bill that pays at maturity?
2. What are the annualized discount rate and your annualized investment rate on a Treasury bill that you purchase for that will mature in 91 days for ?
1. What would be the underestimation of your earnings as an investor if you use the discount rate instead of the investment rate to measure the return on your investment if you buy a T-bill that
15. Why are banker’s acceptances so popular for international transactions?
14. Suppose the U.S. government defaults on its payments (i.e., cannot pay T-bills at their maturity date). What would be the effect on the T-bill rate? What would be the effect on the interest rates
13. Does the Federal Reserve directly set the federal funds interest rate? How does the Fed influence this rate?
12. Who lends or borrows federal funds, and what is the usual purpose of these funds?
11. Distinguish between competitive bidding and noncompetitive bidding for Treasury securities.
10. The interest rate on negotiable CDs is usually very close to the Tbill interest rate; however, the gap between these rates increased substantially between March 2008 and mid-2009. Why do you
9. Why do property and casualty insurance companies invest more funds than life insurance companies in the money markets?
8. What purpose initially motivated Merrill Lynch to offer money market mutual funds to its customers?
7. Why do businesses use the money markets?
6. Explain why the U.S. Treasury has to make every possible effort to keep its T-bill auctions competitive.
5. What motivated regulators to impose interest ceilings on bank savings accounts? What effect did this eventually have on the money markets?
4. Explain why asymmetric information problems do not prevent money market participants from buying and selling money market instruments.
3. Why does the existence of banks banks not eliminate the need for money markets?
2. Describe at least two distinct benefits that money markets offer to their participants.
1. What characteristics define the money markets?
4. Many countries have central banks that are responsible for their nation’s monetary policy. Go to www.bis.org/cbanks.htm and select one of the central banks (for example, Norway). Review that
3. It is possible to access other central bank Web sites to learn about their structure. One example is the European Central Bank. Go to www.ecb.int. On the ECB home page, find information about the
2. The Federal Open Market Committee (FOMC) meets about every six weeks to assess the state of the economy and to decide what actions the central bank should take. The minutes of this meeting are
1. Go to www.federalreserve.gov/releases/h15/update/. Define the federal funds rate. What is the current federal funds rate? Define the discount rate. What is the current Federal Reserve discount
5. The short-term nominal interest rate is 5%, with an expected inflation of 2%. Economists forecast that next year’s nominal rate will increase by 100 basis points, but inflation will fall to
4. Refer to the previous problem. What would be the cost for this bank to comply with its required reserves if the bank decides to borrow from the Fed at a discount rate of 0.75%? Can you now explain
3. Suppose a bank currently has in deposits and in reserves. The required reserve ratio is 10% (so this bank holds no excess reserves). If there is a deposit outflow (i.e., someone withdraws funds
2. Estimates of unemployment for the upcoming year have been developed as follows:Economy Probability Unemployment Rate (%) Bust 0.15 20 Average 0.50 10 Good 0.20 5 Boom 0.15 1 What is the expected
1. Consider a bank policy to maintain 12% of deposits as reserves. The bank currently has $10 million in deposits and holds $400,000 in excess reserves. What is the required reserve on a new deposit
21. Describe in your own terms the concept of macroprudential regulation. Why might this approach be an important element in preventing credit bubbles?
20. Why would it be better to lean against credit-driven bubbles and clean after other types of asset bubbles crash?
19. Why aren’t most central banks more proactive at trying to use monetary policy to eliminate asset-price bubbles?
18. If higher inflation is bad, then why might it be more advantageous to have a higher inflation target than a lower target closer to zero?
17. A central bank decides to issue a statement declaring that it will not try to eliminate asset-price bubbles. Can you think of a negative consequence of this statement for the central bank’s
16. “A central bank with a dual mandate will achieve lower unemployment in the long run than a central bank with a hierarchical mandate in which price stability takes precedence.” Is this
15. “Because inflation targeting focuses on achieving the inflation target, it will lead to excessive output fluctuations.” Is this statement true, false, or uncertain? Explain your answer.
14. Why might inflation targeting increase support for the independence of the central bank to conduct monetary policy?
13. Suppose your boss asks you to write a report with two conditions: It has to be clear (i.e., well written) and it has to be completed by the end of the day. Do these instructions constitute a dual
12. What incentives arise for a central bank to fall into the timeinconsistency trap of pursuing overly expansionary monetary policy?
11. Give an example of the time-inconsistency problem that you experience in your everyday life.
10. What is the main rationale behind paying negative interest rates to banks for keeping their deposits at central banks in Sweden, Switzerland, and Japan? What could happen to these economies if
9. The benefits of using Fed discount operations to prevent bank panics are straightforward. What are the costs?
8. How do the monetary policy tools of the European System of Central Banks compare to the monetary policy tools of the Fed? Does the ECB have a discount lending facility? Does the ECB pay banks
7. Why is the composition of the Fed’s balance sheet a potentially important aspect of monetary policy during a crisis?
6. What are the advantages and disadvantages of quantitative easing as an alternative to conventional monetary policy when shortterm interest rates are at the zero-lower-bound?
5. Why was the Term Auction Facility more widely used by financial institutions than the discount window during the global financial crisis?
4. With the onset of the global financial crisis, assets on the Federal Reserve’s balance sheet increased dramatically, from approximately billion in 2007 to over trillion in 2016. Many of the
3. “Discounting is no longer needed because the presence of the FDIC eliminates the possibility of bank panics.” Is this statement true, false, or uncertain? Explain your answer.
2. In which economic conditions would a central bank want to use a “forward guidance” strategy? Based on your previous answer, can we easily measure the effects of such a strategy?
1. During the implementation of programs now known as QE programs, between 2008 and 2012, many forecasters claimed that these programs would result in high inflation rates in the future. In light of
2. Go to https://www.ecb.europa.eu/ecb/orga/escb/html/ index.en.html. Click on “Organisation” and choose “Independence.” What is the main argument used to defend the ECB’s political
1. Go to http://www.federalreserve.gov/aboutthefed/. Click on “The Federal Reserve Board” and choose “Board Members.” Find biographical data of members of the Board of Governors by following
15. The Fed promotes secrecy by not releasing the minutes of the FOMC meetings to Congress or the public immediately. Discuss the pros and cons of this policy.
14. How would you argue in favor of the current trend toward central banks’ independence?
13. William does not feel comfortable with the current level of the Fed’s independence. Put yourself in William’s shoes and state an argument against the current level of the Fed’s independence.
11. People in general welcome actions that promote transparency, and in particular when they involve public or quasi-public institutions. Can you think of a reason why a more transparent
10. What are the fundamental differences between the styles of Greenspan and Bernanke and Yellen as chairs of the Fed? Do you think that the recent trend toward increased use of formal econometric

Showing 300 - 400 of 2541

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
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