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- q17 Which of the following types of loans has lower interest rate compared to others? a. Line of Credit b. All the options are wrong c. Long Term Loan d. Short-Term Loan q18 Which of the following is not a Money Market Instrument? a. Certificate of Deposit b. Debentures c. Commercial Paper d. Treasury BillQUESTION 17 Which of the following is not a correct statement? When promissory notes are factored, the full face value is not redeemed. Accounts receivable are discounted in the same way as promissory notes. When accounts receivable are factored, invoices are irrelevant. Promissory notes are a type of commercial paper. Commercial paper is a short-term corporate debt.Please answer fast. 17: reading securitization which one of the among assertions is false: A: Collateralized mortgage obligation involves SPV B: CDO is a debt instrument where the collateral for the promise to pay is an underlying pool of the debt of obligation and even after the CDOs. C: All the assertions are correct D: When an insurance company seeks to reduce its loan exposure on its balance sheet it uses an arbitrage CDO. E: Mortgage pass-through security is a type of Mortgage-backed security but does involve SPV
- 18. Which of the following statements are true?Statement I. An interest rate reflects the rate of return that a creditor receives when lending money, or the rate that a borrower pays when borrowing money. Interest rates change over time, so does the rate earned by creditors who provide loans or the rate paid by borrowers who obtain loans. Statement II. Interest rate movements have a direct influence on the market values of debt securities, such as money market securities, bonds, and mortgages. Statement III. Interest rate movements have an indirect influence on equity security values because they can affect the return by investors who invest in equity securities. Statement IV. Since interest rates have an influence on securities, participants in financial markets attempt to anticipate interest rate movements when restructuring their investment or loan positions. a. I,II,III b. I,II,IV c. I,III,IV d. I,II,III,IVTrue our False? 6. Under the mudarabah account, the depositors will always be guaranteed to get back their deposits. 7. Current, saving and investment accounts are designed to fulfil the motives of holding money. 8. The difference between hibah and interest (riba) is the former is determined ex-ante and the latter is ex-post. 9. Statutory reserve requirement is part of regulatory costs for Islamic deposit. 10. Islamic bank can offer the sale of foreign currency through murabahah financing.34- What kind of Interest does a negotiable certificate of deposit issued by large commercial banks carry? a. No Interest Rate b. Fixed Interest Rate c. Variable Interest Rate d. Changing Interest rate
- 171.One of the elements addressed in the Dodd-Frank bill was authority over nonbank financial institutions that face bankruptcy. A)True B)False 172.The Dodd-Frank bill established the Consumer Financial Protection Bureau to help consumers understand the financial impact of Social Security. A)True B)False 173.Explain the trade-off between rate of return and liquidity. How do banks affect the trade-off? 174.What is maturity transformation? Explain the difference between maturity transformation by depository banks and by shadow banks. 175.Explain how shadow banks, which don't take deposits, can have bank runs. 176.Explain the two main causes of banking crises. 177.What caused the banking crises in the 1990s in Finland, Sweden, and Japan? 178.Describe the financial contagion that occurred during the Irish banking crisis in 2008. 179.Why are banking-crisis recessions so bad? 180.Explain the difference…2 of Banks tend to never deduct interest at any other time than at the END of the loan. Select one: True False25 What lesson did we derive from Suratul Baqara Q2:280 in relation to Islamic banks’ debtor-customer relations?* A. If the debtor is in difficulty, grant him time till it is easy for him to repay B. Be lenient to customers at the time of financing the project C. Default charges apply to any delay of payment D. Cancel the transactions
- Question 5.A bank has borrowing needs at timeT >0. Show that by combining an FRAtrade today with a libor loan at timeT, the bank can today lock in its interest cost forthe periodTtoT+α. Does the borrowing bank need to buy or sell the FRA to do this?What is the fixed rate that the bank locks in?EXERCISE 1Indicate whether each of the following statements is true or false. Support your answerswith the relevant explanations. A. Modigliani and Miller’s Proposition II assumes that increased borrowing doesnot affect the interest rate on the firm’s debt. (Explain your reasoning.)Question 24 Which of the following is an advantage of debt over equity A It's generally cheaper B Repayments are generally flexible C Assets can be given as security on debt D The bank can help in the day to day running of the business