7. (2 points) What is the difference (in words, not numbers) between the Federal Funds market and the market for Discount Window loans?

8. (2 points) What is LIBOR and where does it come into play in the financial markets? What measurement is expected to replace LIBOR by the end of 2021?

9. (3 points) What is/are the basic difference(s) between the money and capital markets?

10. (3 points) How does direct commercial paper differ from dealer commercial paper? Which one would likely be more expensive for a company to issue? Explain your answer.

11. (3 points) In class, we discussed different ways to calculate the return or yield on a money market financial instrument. We started with Holding Period Return (simple interest) and worked through Bank Discount Yield, Money Market 360-day Yield, Money Market 365-day Yield, and APY. (Formulae provided, below.) We showed that using the same inputs for current price and maturity value, you could get different answers for each quotation method. Explain the three issues behind why the quotation methods yield different results.

Money Market interest rate quotations:

Simple interest rate = (Pn - Po) / Po

Bank Discount Yield (BDY) = {(Pn - Po) / Pn}*{360/n}

Money Market 360 day yield = {(Pn - Po) / Po}*{360/n}

Money Market 365 day yield = {(Pn - Po) / Po}*{365/n}

True (effective) yield (APY) = {1 + [(Pn - Po) / Po]}^365/n - 1

12. (6 points) How has the U.S. helped/subsidized the U.S. personal housing market from the 1930s forward? What institutions are now involved? What is the major characteristic/purpose of each of these agencies? What has been the impact on the overall U.S. housing market from this government support?