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Answer all questions. 1. Please refer to page 28. Comment on the size, structure and composition of the commercial banking industry. Do you think that the outlook for the industry is positive or negative ? 2. Evaluate the classes and subclasses of life insurance by comparing their benefits and risks. 3. Assess the regulatory environment faced by brokerages and investment banking firms. Do you consider this environment to be highly regulated, moderately regulated or unregulated ? Justify your response. 4. Compare and contrast liquidity risk with credit risk. 5. Describe the size, structure and composition of the mutual fund industry. Do you consider these characteristics as having a positive or negative impact on investors ? Why ? 6. An investment bank pays $23.00 for 4 million shares of JC Co., and then resells them for $25 per share. How much money does JC receive ? What is the profit to the investment bank ? 7. An investment bank pays $20.50 per share for 3 million shares of X. It then sells these shares to the public for @22.50 per share. How much money does X receive ? What is the profit to the investment bank ? What is the stock price of X ? 8. A mutual fund owns 500 shares of X currently trading at $12, and 300 shares of Y, currently trading at $24. The fund has 800 shares outstanding. a. What is the Net Asset Value of the fund ? b. If investors expect the price of X shares to increase to $ 14, and Y shares to decrease to $ 23 at the end of the year, what is the new NAV ? c. Assume that the expected price of X shares is realized at $14.00. What is the maximum price decrease that can occur to Y to realize the end-of-year NAV equal to the NAV estimated in part a ? 9. Assume that a bank has assets located in the EU worth 101 million euros, on which it earns an average of 5% per year. The spot exchange rate is $ 0.76 euros/$. a. If the exchange rate at the end of the year is $0.79 euros/dollar, will the dollar have appreciated or depreciated against the euro ? b. Given the change in the exchange rate, what is the effect in dollars on the net interest income from foreign assets and liabilities ? 10. Consider the following balance sheet for X Savings (in millions). Assets Floating rate mortgages $40 (Currently 9% annually) 30-year fixed rate loans 40 (Currently 6% annually) Total Assets 80 Liabilities and Equity 1-year time deposits 50 (Currently 5% annually) 3-year time deposits 20 (Currently 7% annually) Equity 10 Total liabilities and equity 80 a. What is X's expected net interest income at year-end ? b. What will net interest income be if interest rates rise by 1% ? c. Using the cumulative repricing gap model, what is the expected net interest income for a 1% increase in interest rates ? d. What will net interest income be at year end if interest rates on rate sensitive assets increase by 1%, but interest rates on rate-sensitive liabilities increase by 0.5% ? BOOKS STUDY MORE Activate Up to 5% Cash Back home / study / questions and answers / business / nance / 1. compare and contrast credit risk with liquidity ... Find books, solutions, tutors and more... Activate Later Post new question Question Expert answers in as little as 30 minutes 1. Compare and contrast credit risk with liquidity risk. 2. Describe the size, structure and composition of the mutual fund industry. Do you consider these characteristics as having a positive or negative impact on investors ? Why ? Continue to post 3. An investment bank pays $ 23.00 for 4 million shares of JC Co., and then resells them for $ 25 per share. How much money does JC receive? What is the prot to the investment bank ? 7. An investment bank pays $ 20.50 per share for 3 million shares of X. It then sells these shares to the public for $ 22.50 per share. How much money does X receive ? What is the prot to the investment bank ? What is the stock price of X ? People who viewed this also viewed these solutions Financial Institutions Management A Risk Management Approach (7th Edition) View comments (1) Best Answer Mind Games answered this 21 minutes later 900 answers Continue to edit and attach image(s). Anthony Saunders Was this answer helpful? 0 0 A. An investment bank pays $ 23.00 for 4 million shares of JC Co., and then resells them for $ 25 per share. How much money does JC receive? What is the prot to the investment bank? Financial Institutions Management (8th Edition) Anthony Saunders Sale proceed from shares = $25*4,000,000 = $100,000,000 ..Ans (a) Cost of Buying Shares = $23*4,000,000 = $92,000,0000 Find your book So prot = Sale- Cost = 100,000,000 - 92,000,000 = 8,000,000 .........Ans (b) B. An investment bank pays $ 20.50 per share for 3 million shares of X. It then sells these shares to the public for $ 22.50 per share. How much money does X receive? What is the prot to the investment bank? What is the stock price of X? Amount paid to X for Shares = $20.50*3,000,000 Finance tutors who can help right now Bayode A. University of Texas i... 10 = $61,500,0000 ........Ans (a) Sale proceed from shares to Public = $22.5*3,000,000 Michael S. Ball State University 36 = $67,500,000 So prot to Bank = Sale- Cost = 67,500,000 - 61,500,000 Anup S. Certied Public Acco... = 6,000,000 .........Ans (b) Stock price of X will be the cost of acquision for public which is $22.50 View comments (1) See more tutors 475 ABOUT CHEGG RESOURCES TEXTBOOK LINKS STUDENT SERVICES COMPANY Media Center Site Map Return Your Books Chegg Study Help Chegg College Blog Chegg For Good Mobile Textbook Rental Chegg Coupon Jobs College Marketing Publishers eTextbooks Solutions Manual Customer Service Privacy Policy Join Our Afliate Program Used Textbooks Scholarships Give Us Feedback Your CA Privacy Rights Advertising Choices Cheap Textbooks Career Search Terms of Use College Textbooks Online Tutoring General Policies Sell Textbooks Internships Intellectual Property Rights College Search Investor Relations Enrollment Services Over 6 million trees planted 2003-2016 Chegg Inc. All rights reserved. TUTORS CHAT