a)A mortgage loan of $100,000 is to be repaid with monthly instalments of $783.36 at an interest rate of 4.5% per annum.

Find the:

i) The number of monthly payments and hence the term of the loan

ii) The total interest charged.

b) Why is there an increased importance, when compared to other industries, to monitor and regulate banks?

c) Explain what liquidity is, its characteristics and why it is important in relation to trading in financial markets?

d) Define four differences between a forward contract and a futures contract? Discuss the advantages and disadvantages of forwards and futures.