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- Discuss the role and function of any large financial institution in St.Lucia as well as THREE impacts that intuition has on the economy of St.Lucia. Any financial institution excluding the Central Bank.State THREE roles and TWO functions of any large financial institution in the commonwealth of Dominica and discuss THREE impacts that that intuition has on the economy the country . Any financial institution excluding the Central Bank.What are the causes and impact of financial crisis 2007 – 08 on world economy with special reference to the Indian economy.
- Explain how capital adequacy requirements may affect a commercial bank’s dividend payout and growth potential. If the bank anticipates a decrease in its capital adequacy ratio (capital to total asset ratio), what options are available to prevent the decline? What risks, if any, are there in each strategy? Use the following balance sheet to answer questions 5-8 ($000) Cash 21 Demand Deposits 550 Securities 369 Fed Funds (Borrowings) 151 Loans 400 Equity 89A financial intermediary (FI) has been borrowing overnight, from just two lenders, to fund purchases of relatively illiquid bonds. Each lender has been lending $D to the FI. Every morning, each lender has to decide whether to roll over his loan to the FI, or to withdraw his loan. Suppose that, if both lenders to the FI choose to roll over, the FI remains in business and will repay both lenders with interest: each lender will receive (1 ) + i D . If either or both of the lenders withdraws, the FI must immediately sell its bonds at low prices. In that case, each lender receives a fraction z of the money that is owed him, where z is less than one. That is to say, if one withdraws and the other doesn't, the lender who withdraws gets zD; the lender who rolls over gets z i D (1 ) + . If both withdraw, each gets zD. Make a "box" to describe this situation. In each of the four segments of the box, list what is received by "lender A" and "lender B." Circle the segment(s) of the box that is…Why are financial intermediaries the most heavily regulated businesses in the economy? Explain why stock market is an important factor in business investment decisions? What is inflation? What explains inflation? If there is a recession, will it be more difficult to find a job when you graduate? Explain. What are the six types of regulations the government employs in an attempt to ensure the soundness of our financial intermediaries? Explain. Explain the difference between debt and equity markets. primary and secondary markets, exchange and over the counter markets and money and capital markets. What is the difference between foreign bond and a Eurobond? Which institutions are subject to Federal Deposit Insurance corporation (FDIC) regulations, and what is the nature of the regulations? What are the reasons for high transaction costs to exist in a barter economy? What separates the assets included in M1 from the assets included in M2? Does it matter what definition of money policy…
- Which of the following best defines a financial intermediary? a collection of stocks and bonds issued to investors an asset sold by a company which entitles the buyer to partial ownership a claim by a buyer to a future payment by a seller a financial institution that transforms investor funds into financial assetsAs a result of this flight to liquidity, the interest rate in the 20-year Treasury bonds market ________________ ( decreases/ remains the same/ increases) , while the interest rate in the T-bill market ________________ ( decreases/ remains the same/ increases) . Consequently, the default risk premium spread ________________ ( decreases/ remains the same/ increases)A large money center bank uses the US treasury yield curve to determine the appropriate level for its lending rates. To compensate for the costs of making a loan, the bank needs to charge 1.8% point more than the expected future interest rate on a Treasury security with the same maturity if it is to make a profit. The manager is considering a loan request from a customer seeking a one year loan that starts 2 years from today. If the two-year Treasury Strip rate is 4.1% and the three-year Treasury strip rate is 5.5%, at what minimum rate should the manager be willing to make the loan commitment?Enter your answer as a % to two decimal places. Assume the expectation theory of rates is valid and all liquidity premiums are zero.
- Which of the following is not a function of financial intermediaries? A Deal with asymmetric information problems B. Reduce the exposure of investors to risk C. Promote adverse selection after transactions. D. Lower transaction costsQ1: Define and differentiate between: a) Organized exchanges and Over the counter markets b) Open Ended vs Closed Ended Mutual Funds c) Moral Hazard and Adverse selection Q2: What is meant by asset transformation and how is it the basis for differentiating between indirect finance and direct finance? Q3: What are the three main reasons for regulating financial markets and institutions? Also list the major regulation examples under each of the three reasons. Q4: What value do mutual funds add for individual investors and how? Q5: Using the relevant financial securities and institutions, explain the chain of events which lead to the 2007 global financial crisis. Q6: Last year Fauji Fertilizer Company Limited (FFCL) gave an annual dividend per share of Rs. 8.85 which is expected to grow at 5%, forever. Calculate the per share price of the stock if its required rate of return is 14%? Q7: Calculate the duration of a 7-year coupon bond having a 11% coupon rate. The current market…Analyze the potential impact of a prolonged period of negative interest rates on the banking sector's profitability and lending behavior. Additionally, investigate how such an interest rate environment might alter consumer savings rates, corporate investment decisions, and the overall risk appetite within financial markets.
