Question 3 (10 marks) You are the winner of a lottery that pays a quarterly cash payment of $5000 to you for the next 5 years. You decide that the funds should be paid directly into a cash management trust held with an investment bank. The account is expected to earn 5 per cent per annum, compounded quarterly. What will be the accumulated value of the cash management trust at the end of the 5 years? Show your working. (

Question 4 (10 marks)

a) What price per $100,000 of face value would a fund manager be prepared to pay to purchase 30-day Treasury notes if the current yield on these instruments was 3% per annum? Show your working.

b) A commercial bill with a face value of $10,000 and 270 days to maturity is purchased with a yield to maturity of 5.75 per cent per annum. After the bill has been held for 100 days it is sold at a yield of 4.35 per cent per annum. What rate of return was earned by the original holder of the bill; that is, what is the holding period yield? Show your working.

Question 5 (10 marks) a) What is the difference between a Foreign Bond and a Eurobond? Explain you answer with examples.

b) Define Equity, Debt and Derivative

c) Describe the main types of non-bank Financial Institutions (FI). Give two examples of non-bank FIs that are allowed to accept deposits.