1. You have the choice of investing in top-rated commercial paper or commercial paper that have a low-risk rating. How do you think the risk and return performances of the two investments differ?
2. Bin Hindi arranged a repurchase agreement for purchasing securities worth $7.8 million and will sell the securities for $8 million in 120 days. What is the yield to Bin Hindi?
3. Suppose you deposit $5000 in your Ahli bank account. Suppose that the reserve ratio requirement is 8% and there is no cash withdrawn. (a) show the change in deposits, reserves, and loans for the first three rounds of activity. (b) Compute the eventual total change in deposits, reserves, loans, and the money multiplier.