Capital Market What role do interest rates play in allocating capital to different potential borrowers? What happens to market-clearing, or equilibrium, interest rates in a capital market when the demand for funds declines? What happens when expected inflation increases or decreases? How does the price of capital tend to change during a boom or a […]
How do investors deal with inflation when they determine interest rates in the financial markets? Does the interest rate on a T-bond include a default risk premium? Explain.
Financial Markets Write out an equation for the nominal interest rate on any security. Distinguish between the real risk-free rate of interest, r*, and the nominal, or quoted, risk-free rate of interest, r RF. How do investors deal with inflation when they determine interest rates in the financial markets? Does the interest rate on a […]
What is a yield curve, and what information would you need to draw this curve? Distinguish among the shapes of a “normal” yield curve, an “abnormal” curve, and a “humped” curve.
Yield Curve What is a yield curve, and what information would you need to draw this curve? Distinguish among the shapes of a “normal” yield curve, an “abnormal” curve, and a “humped” curve. If the interest rates on 1-, 5-, 10-, and 30-year bonds are 4, 5, 6, and 7 percent, respectively, how would you […]
How do maturity risk premiums affect the yield curve? If the inflation rate is expected to increase, would this increase or decrease the slope of the yield curve?
Maturity Risk Premiums How do maturity risk premiums affect the yield curve? If the inflation rate is expected to increase, would this increase or decrease the slope of the yield curve? If the inflation rate is expected to remain constant at the current level in the future, would the yield curve slope up, down, or […]
Create an e-Portfolio that includes a globally revised version of one of the major writing projects, supporting documents reflecting your particular composing practices and writing skills, and a reflective statement that articulates what you have learned about writing by completing the major projects in the course.
E-Portfolio (Minimum of 500 words for the Reflective Statement) An electronic writing portfolio, or e-Portfolio, is typically a collection of writing samples that showcases your best work. A writing portfolio is created by collecting, selecting, and reflecting on writing that is completed at the end of a given period of time—a unit, a course, a […]
Does the Fed have complete control over U.S. interest rates; that is, can it set rates at any level it chooses? Why or why not?
Fed stimulate the economy How does the Fed stimulate the economy? How does the Fed affect interest rates? Does the Fed have complete control over U.S. interest rates; that is, can it set rates at any level it chooses? Why or why not? What is country risk? What is exchange rate risk? On what two […]
Differentiate between the following types of markets: physical asset versus financial markets, spot versus futures markets, money versus capital markets, primary versus secondary markets, and public versus private markets.
Financial markets Financial markets and institutions Assume that you recently graduated with a degree in finance and have just reported to work as an investment advisor at the brokerage firm of Smyth Barry & Co. Your first assignment is to explain the nature of the U.S. financial markets to Michelle Varga, a professional tennis player […]
What is the price paid to borrow debt capital called? What are the two items whose sum is the cost of equity?
Questions What is the price paid to borrow debt capital called? What are the two items whose sum is the cost of equity? What four fundamental factors affect the cost of money?
Differentiate between dealer markets and stock markets that have a physical location. Identify and briefly compare the two leading stock exchanges in the United States today.
QUESTIONS 5-1 How does a cost-efficient capital market help to reduce the prices of goods and services? 5-2 Describe the different ways in which capital can be transferred from suppliers of capital to those who are demanding capital. 5-3 Is an initial public offering an example of a primary or a secondary market transaction? 5-4 […]
Define each of the following terms: Investment banking house; commercial banks; financial services corporations; mutual funds; money market funds.
ASSIGNMENT Define each of the following terms: Spot markets; futures markets Money markets; capital markets Primary markets; secondary markets Private markets; public markets Derivatives Investment banking house; commercial banks; financial services corporations Mutual funds; money market funds Physical location exchanges; over-the-counter market (OTC); dealer market Closely held corporation; publicly owned corporation Going public; initial public […]