a$)$ Give an example of three financial intermediaries and explain how they act as a bridge between small investors

and large capital markets or corporations. $($BKM $1\mathrm{.}13)$

b$)$ Describe one advantage and one disadvantage for the investor to invest in a callable bond. $($BKM $14,$ CFA $5)$

c$)$ "When the zero curve is upward sloping, the zero rate for a particular maturity is greater than the par yield for

that maturity. When the zero curve is downward sloping, the reverse is true." Explain why this is so$.($Hull

$4\mathrm{.}18)$

d$)$ Explain the difference between the credit risk and the market risk in a financial contract. $($Hull $7\mathrm{.}6)$

e$)$ Is it correct to use the Balck$-$Scholes model to price an American $i)$ call option and ii$)$ put option on a non$-$

dividend paying stock?