1. Definitions. (59*8) (1) Gross Domestic Product (2) adverse selection (3) moral hazard (4) fixed-income bond (5) discount bond (6) relative PPP (7) exchange rate overshooting (8) Nonbank Banks 2. Please provide the answers in detail. (10' * (1) Please describe the functions of money, and provide 2-3 examples for each function of money. (2) 1 If the growth rate of money supply increases, what will happen to the interest rate, investor's behavior, customer's behavior, the development of a country, respectively. 2 In which situations, the government will increase the money supply. (3) What are the term structure facts? What are the three hypothesis to explain the term structure facts? 3. Calculations. (10' *3) (1) 1 If borrower A borrow 1000RMB for 3 year, how much money he will give in the final month. interest rate=8%, paid monthly) 2 If investor B bought stock A with dividend that was paid yearly, what's the value of stock A. (interest rate=8%, dividend value=S15) (2) Please calculate the PV of each bond. 1 simple bond: FV-1000, interest rate - 8%; 2 fixed-income bond: interest rate = 12%, FV = 1000, year = 3; 3 coupon bond: interest rate = 12%, FV = 1000, year = 3; 4 discount bond: discount rate = 12%, FV = 1000. (3) Please use liquidity premium hypothesis to do the following calculations. One-year interest rate over the next six years: 3.5%, 4%, 4.5%, 5%, 5.5%, 6% Investors' preferences for holding short-term bonds, liquidity premiums for one to six-year bonds: 0%, 0.15%, 0.3%, 0.5%, 06%, 1.0%. Please calculate the interest rate for one to six year bonds, respectively. Moreover, please show us the calculation stens