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- 1. Which of the following is not a way in which banks lend short-term unsecured loans? Choices: By sending the amount earned from trust and investment products offered by the bank Through a guaranteed credit line that has a commitment fee for any unused amount for the year Through credits cards lines with a certain credit limit By lending a single date maturity loan to a debtor 2. The following are methods of acquiring funds through long-term financing, except Choices: Issuing bonds with semi-annual coupon payment at a discounted price Selling equity securities at an amount above the par value indicated in the stock certificate Issuing a note that indicates a promise to pay the indicated supplier in a future date Selling equity securities with a characteristic of both debt and equity security 3. Which is false about long-term sources of a firm's capital? Choices: Preferred shares are securities whose intrinsic value is based on prospective earnings All types of…3. Explain different types of money market instruments. In each of the below cases, which money market instruments would you recommend and why? a. A mutual fund manager has INR 450 million of cash, which he needs to park for a period of less than 180 days, where he will move this to equity b. An oil refining company wishes to borrow INR 1500 million for a period of 90 days to fund its settlement of invoicesIf reserves are scarce, how would the federal funds rate change (increase or decrease) if the Fed:(a) sells mortgage-backed securities(b) decreases the (minimum) reserve requirements(c) conducts overnight repo operations(d) conducts overnight reverse repo operations.
- Mutual funds can effectively charge sales fees in one of three ways: front-end load fees, 12b-1 (i.e., annual) fees, or deferred (i.e., back-end) load fees. Assume that the SAS Fund offers its investors the choice of the following sales fee arrangements: (1) a 4% front-end load, (2) a 0.50% annual deduction, or (3) a 2% back-end load, paid at the liquidation of the investor's position. Also, assume that SAS Fund averages NAV growth of 11% per year. If you start with $100,000 in investment capital, calculate what an investment in SAS would be worth in three years under each of the proposed sales fee schemes. Which scheme would you choose? Do not round intermediate calculations. Round your answers to the nearest cent. Scheme 1: Scheme 2: Scheme 3: Choose: If your investment horizon were 10 years, would your answer in Part a change? Do not round intermediate calculations. Round your answers to the nearest cent. Scheme 1: Scheme 2: Scheme 3: Choose:What are some of the ways that banks can borrow short-term funds when they need "liquidity"?(Select all that apply; three of the answers below are correct.) Reference: Chapters 11 & 12 They can borrow directly from the Securities & Exchange Commission through the "regulatory" market. They can borrow from the Department of Treasury through the "Treasury" window. They can borrow another bank's reserves through the "fed funds" market. The can engage in a "sale & repurchase agreement" (or "repo") by selling some of their securities to another financial insitution and promising to buy them back the next day. They can borrow directly from the Federal Reserve through the "discount window".From page 9-3 of the VLN, what are the cash flows from a bond that must be present valued back to today? Group of answer choices A. The face amount only B. The interest payments only C. The issue price only D. The face amount and interest payments
- Assume a bank can invest in a government bonds at a risk-free rate of 5.6%. Alternatively, it can invest in a corporate bond with a default probability of 6.5%. If the issuer defaults, the bank expects to recover 28.3% of the investment. A risk-averse bank that requires an additional premium of 2.9% as a result of risk aversion would be indifferent between investing in the government bond and the corporate bond if the corporate bond offers a rate of __________. Calculate the answer by read surrounding text. %. Round to the nearest 0.01%, drop the % symbol. E.g., if your answer is 0.10245 or 10.245%, record it as 10.25.The M1 measure of the money supply includes which of the following? savings deposits cryptocurrencies money market mutual funds O None of the above O All of the abovebank manager wants to protect the bank against losses that would be incurred on its portfolio of Treasury securities should interest rates rise, he could financial futures. If a Not yet options on answered Points out of 1 Select one: PFlag question A. sell put B. sell call C. buy put D.buy call
- A4) Finance Would you rather borrow at the federal funds market than from the discount window if your bank is in the 99th percentile of the distribution (i.e., considered to be among the riskiest counterparties in the federal funds market)? Please consider the cost of funds (interest rate) to be your primary consideration when making this decision and answering this question. a. Yes, I would prefer to borrow at the federal funds market. b. No, I would prefer to borrow at the discount rate window.Which of the following are money market securities?I. Jumbo CDsII. Short-term municipal debtIII. U.S. Treasury billsIV. Commercial paper A. I and IV only B. II and III only C. I, II, and IV only D. II, III, and IV only E. I, II, III, and IVSituation: I want to invest my 5 million pesos in Mutual funds. Discuss the following: A. Security of MoneyB. Returns on investmentC. Risks involvedD. Impact to government and society Conclusion of Letter A. to D.