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Problem 2. (A) What is a financial system? Frame your answer in both structural (institutional) and functional perspectives (15 marks) (B) What is the relationship

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Problem 2. (A) What is a financial system? Frame your answer in both structural (institutional) and functional perspectives (15 marks) (B) What is the relationship between spot and forward rates? What rates are used to compute the present value of cash flows? How can the 'normal' shape of the yield curve be incorporated into the calculation of NPV? (10 points)

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