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i need assistance to the the attached take home exam.

FIN 6246: MSF - Summer 2017 Final Review Questions Instructions all questions as a review for final exam. A. Answer B. Suggested length: minimum one page; maximum 2 pages per Question or Problem; Quality, rather than quantity will be rewarded. (Times New Roman 11 font size; 1.5 spacing) C. Please be very precise, specific and direct in your answers. Wherever required use equations/formula, and graphs/diagrams; be sure to identify the different variables. In calculations, approximate to two decimal places. CUT AND PASTE JOB from the Lecture Notes, or Book, or Internet will result in minimum grade. Extra research is expected & rewarded. If external work is quoted, identify with suitable references. Original Thinking is expected and rewarded. D. 20 Questions provided 50 E. You will be answering Five Select questions/problems from these questions only. There will be NO choice. I will select the questions. Depending on the materials covered, & new developments, I \"may\" delete/add one more question later. The exams will be customized and will be different for each student. days ahead of time so you can be well PREPARED QUESTIONS 1. [https://www.msci.com/market-classification] Morgan Stanley has identified RUSSIA as an Emerging Market while United Kingdom has been classified as a Developed Market. Do you agree with this classification? This has severe implications as Global investment funds avoid or minimize their investments in Emerging Markets. RUSSIA wants to be reclassified and wants Morgan Stanley to identify the required conditions and metrics for classification under Developed Market, and what substantial changes that country should do to be classified as a Developed Market. 2. What is the future of 'Banking'? Discuss the future of Omni-channel banking in the face of numerous technological developments such as 'mobile' and 'cloud' and cyber threats such as Project Blitzkrieg, and Quantum Dawn II. What should institutions and regulators do to protect the security and privacy of individuals? Who should bear the increased cost of Cyber-security? [Class Notes and Discussions] 3. Critically evaluate the 2017 \"Financial Freedom Act\" draft that attempts to phase out the 2010 Dodd-Frank Act: with specific reference to A. Securitization Regulations B. Derivatives Trading C. Consumer Protection Regulations Are the new regulations adequate to avoid the next crisis? Why or Why not? 4. Credit Default Swaps [CDS] have been identified as the single major culprit for the collapse of the financial market. Explain in your own words, what CDS are, what their uses are, and what was the role of CDS was in the ensuing financial crisis. What additional regulations should we enact regarding CDS? [Class Discussions and Assigned Reading Article] 5. Identify and explain the Monetary Equation? What are its economic implications? Based on the theory, explain the rationale for Quantitative Easing 3 [QE3] and its potential impact on the economy? Will we have a QE 4? 6. Using graphs and equations, explain in depth the Term Structure Theories: Rational Expectations theory of Term Structure Liquidity Premium theory of Term structure Market Segmentation theory of Term structure 7. Immunization Strategies: Discuss the different interest rate immunization strategies used by banks and financial institutions over the prior decades using an example, and identify its effectiveness in achieving the goal? [Book and Class Notes] 8. BASLE III: On June 7, 2012, The US Federal Reserve signed off on proposed new regulations to bring US banks in line with the Basel III global standards, aimed at giving banks more crisis-resistant footings. The US rules will give bank holding companies and savings and loans companies with at least $500 million in assets until 2019 to meet the new capital rules. A. What are the potential challenges in Implementing Basle III standards for American Financial Institutions by 2019? B. How is Basle III different from Basle II and what additional requirements it imposes on individual institutions? C. What are its implications for overall global financial stability? D. What are the major arguments of US Institutions against its implementation? 9. Savings and Loan Crisis: In 1982, 85% of the savings & loans were on the verge of Bankruptcy. Explain the fundamental reasons why this crisis happened. Also explain the steps taken to address the crisis & prevent a collapse of the system; evaluate its effectiveness. [Book and Class Notes] 10. FDIC was very close to Insolvency during the Financial Crisis. Given that FDIC insures trillions of dollars in deposits, and has reserves totaling only $50 billion, comment on the following four ideas, and analyze its implications. [Book and Class Notes] A. Roll back its individual deposit coverage back to $100,000 from $250,000. B. Double its premium charges across the board for all banks. C. Charge riskier banks higher premiums, even if it leads to lack of profitability D. Levy an additional charge, directly or through the Fed, to the general public. 11. V@R: Explain in your own words what is 'Value at Risk'? Using an assumed example, show how this concept helps financial institutions manage interest rate risk? What are its uses and advantages? What are its limitations? How reliable is this measure? Is expected shortfall a more optimal measure for Bank's capital? Why or Why not? How do we address the shortcomings of Expected Shortfall? [Class discussions and assigned reading Article] 12. Efficient Capital Markets: What does ECM mean? What are the implications of Market Efficiency for the behavior of security prices? Do you think Global Capital Markets are Efficient? Explain the historical record of Efficiency on these markets: First market; Second Market; Third Market; Fourth Market 13. Too-big to fail: What institutions are too big to fail? Why are such institutions allowed to exist and operate in the world? What should regulators do about these institutions [like JP Morgan Chase; AIG] when they have excessive losses? Critically evaluate what has happened to too-big-to-fail institutions in the USA since the financial crisis of 2008? Looking forward, what meaningful regulations would you enact to break-up their operation, and prevent causing a world-wide contagion? 14. STRESS TESTING of banks and capital injection has been adopted in the United States, and is being currently implemented by the European Banks. What is Stress Testing and what are the advantages and limitations of Stress Testing? Explain in your own words how reliable are these tests for ensuring banking stability and preventing contagion? 15. Dutch 'Auction': Blackstone group, a privately held company, is contemplating going public either through the traditional method using investment bankers or selling shares using the Dutch Auction Method used by Google. What are the costs and benefits of both methods and as a financial consultant what would you advise them. Why? What other relevant issues should you consider when going public? PROBLEMS In Problems you will be given a SIMILAR problem; NOT the same problem. 16. Mortgage Rates: You have been hired as a bank loan consultant by MIAMI-BANK and they want your input in setting loan rates for new Ten year mortgages. Based on what you have learnt in this course, and using an assumed numerical example, Explain, step-by-step how you would set up the new mortgage rate? [Book and Class Notes] Based on the materials we have studied in this course, and based on the latest data obtained from FDIC website Compare and Contrast \"Bank of America\" and \"Citibank\". Using the standard metrics, w 1. Interest Rate Swaps: Explain using an example, \"Interest Rate Swaps\" [IRS]? How are these used by corporations & banks to hedge risks? Are Swaps optimal for risk transfer for banks & local governments? Why or Why not? [Book and Class Notes] 2. hat specific areas are strengths for Bank of America and Citibank? What are the potential weakness and challenges for both these financial institutions? 3. Bank Duration GAP: State Bank's balance sheet is listed below. Market yields and durations (in years) are in parenthesis, and amounts are in millions. Calculate Assets Liabilities and Equity Cash $20 Demand Deposits Fed Funds (5.05%, 0.02) 150 MMDAs (4.5%, 0.50) T-bills (5.25%, 0.22) 300 (no minimum balance requirement) 360 T-bonds (7.50%, 7.55) 200 CDs (4.3%, 0.48) 715 Consumer loans (6%, 2.50) 900 CDs(6%, 4.45) C&I loans (5.8%, 6.58) 475 Fed Fund (5%, 0.02) 515 Commercial paper (5.05%, 0.45) 400 Fixed-rate mortgages (7.85, 19.50) 1200 Variable-rate mortgages, 1,105 Subordinated debt: repriced @ quarter (6.3%, 0.25) 580 Fixed-rate (7.25%, 6.65) Premises and equipment 120 Total Liabilities Equity Total assets $250 $3,945 Total Liabilities and equity a. What is State's Bank's duration gap? b. Use these duration values to calculate the expected changed in the value of the assets and liabilities of State Bank for the predicted increase of 1.5 percent in interest rates. c. What is the change in equity value forecasted from the duration values for the predicted increase in interest rates of 1.5 percent? 200 $3,545 400 $3,945 4. Risk-Adjusted Performance Metrics for a Project - Basle 2.0 Framework: Calculate: 1. The Expected Loss, 2. Total Revenue, 3. Risk Adjusted Revenue, 4. Economic Revenue and 5. Economic Profit for this Bank proposal? Assumptions: regarding a single counterparty who is a global car manufacturer; Basle II Framework. The counterparty rating: is rated 5A by the bank's internal rating model and credit committee. This translates into a Probability of Default of [PD]=0.22% Product type: Syndication. The bank expects to earn a margin of 0.575% (57.5 Basis points) on this loan, plus a one-time fee of $589,273. Location: The booking location is England, but the loan is to be issued to the Netherlands (in Euros) with a tenor of 1 year. The Amount: The drawn amount would equal the limit, which is requested to be $147,318,182 The Exposure: The bank's model indicates the Loss Given Default for this transaction would be 60.86% of exposure. Capital Charge: The treasury assesses a Capital Charge of $382,631 Other Charges: Group Finance provides the following overhead allocations to the transaction. Total Costs Allocated: $143,353; Tax = $217,114 5. Interest Rate Swaps: Explain using an example, \"Interest Rate Swaps\" [IRS]? How are these used by corporations & banks to hedge risks? Are Swaps optimal for risk transfer for banks & local governments? Why or Why not? [Book and Class Notes]