Posted: September 16th, 2017
Financial Markets
PART 1
1. Choose three economic indicators one of each type (leading, lagging, and coincident). Define the measure, explain the timing and source of reporting, provide current measure and trend over the last year.
2. Which financial statement shows the amount of bonds and money market instruments a company has issued or invested in?
3. In most current financial statement from question #2 – what are the dollar amounts of bonds and money market securities that Amazon has issued? How much has Amazon invested in money marked securities?
PART 2
Find out which bonds Amazon has outstanding and share info about five of these bond issues based on info in the annual report. Info should include: Issue Date, Issue Size, Initial Term, Remaining Term, and Coupon rate.
What is the approximate size of the Bond Market and the Money Markets? For comparison, how large is the equity market? What are reasons for the significant difference?
PART 3
1. Let’s think about factors that can influence each of these components, give at least one factor that affects each of the following:
a. Risk free rate
b. Inflation premium
c. Default risk premium
d. Liquidity premium
e. Maturity risk premium
2. How does collateral affect the interest rate on a bond? How does subordination affect the interest rate on a bond too?
3. Which financial statement is used to determine outstanding debt (bonds)? What bond issues does Amazon have outstanding (from annual report details)? Provide characteristics, features, and provisions of different bond issues from Amazon .
4. What are the primary bond categories and how do they differ?
Assignment 3
Chapter 4
1. The Fed Briefly describe the origin of the Federal Reserve System. Describe the functions of the Fed district banks.
5. Beige Book What is the Beige Book, and why is it important to the FOMC?
10. Effect on Money Supply Why do the Fed’s open market operations have a different effect on the money supply than do transactions between two depository institutions?
15. The Fed’s Impact on Home Purchases Explain how the Fed influences the monthly mortgage
payments on homes. How might the Fed indirectly influence the total demand for home by consumers?
chapter 5
1. Impact of Monetary Policy How does the Fed’s monetary policy affect economic conditions?
2. Trade-offs of Monetary Policy Describe the economic trade-off faced by the Fed in achieving its economic goals.
4. Active Monetary Policy Describe an active monetary policy.
5. Passive Monetary Policy Describe a passive monetary policy.
20. Impact of Inflation Targeting by the Fed Assume that the Fed adopts an inflation targeting
strategy. Describe how the Fed’s monetary policy would be affected by an abrupt 15 percent rise in oil prices in response to an oil shortage. Do you think an inflation targeting strategy would be more or less effective in this situation than a strategy of balancing inflation concerns with unemployment concerns?
Explain.
24. Monetary Policy during the Credit Crisis During the credit crisis, the Fed used a stimulative
monetary policy. Why do you think the total amount of loans to households and businesses did not increase as much as the Fed had hoped? Are the lending institutions to blame for the relatively small increase in the total amount of loans extended to households and businesses?
Assignment 4
Chapter 6
1. Primary Market Explain how the Treasury uses the primary market to obtain adequate funding.
2. T-Bill Auction How can investors using the primary T-bill market be assured that their bid will be accepted? Why do large corporations typically make competitive bids rather than noncompetitive bids for
T-bills?
3. Secondary Market for T-Bills Describe the activity in the secondary T-bill market. How can this degree of activity benefit investors in T-bills? Why might a financial institution sometimes consider T-bills as a potential source of funds?
4. Commercial Paper Who issues commercial paper? What types of financial institutions issue
commercial paper? Why do some firms create a department that can directly place commercial paper?
What criteria affect the decision to create such a department?
7. Negotiable CDs How can small investors participate in investments in negotiable certificates of
deposits (NCDs)?
Chapter 7
1. Bond Indenture What is a bond indenture? What is the function of a trustee with respect to the
bond indenture?
2. Sinking-Fund Provision Explain the use of a sinking-fund provision. How can it reduce the investor’s risk?
3. Protective Covenants What are protective covenants? Why are they needed?
4. Call Provisions Explain the use of call provisions on bonds. How can a call provision affect the price of a bond?
5. Bond Collateral Explain the use of bond collateral, and identify the common types of collateral for bonds.
6. Debentures What are debentures? How do they differ from subordinated debentures?
7. Zero-Coupon Bonds What are the advantages and disadvantages to a firm that issues low- or zerocoupon bonds?
8. Variable-Rate Bonds Are variable-rate bonds attractive to investors who expect interest rates to decrease? Explain. Would a firm that needs to borrow funds consider issuing variable-rate bonds if it expects that interest rates will decrease? Explain.
9. Convertible Bonds Why can convertible bonds be issued by firms at a higher price than other bonds?
11. Impact of Credit Crisis on Junk Bonds Explain how the credit crisis affected the default rates of junk bonds and the risk premiums offered on newly issued junk bonds.
Assignment 5
Chapter 8
1. Bond Investment Decision Based on your forecast of interest rates, would you recommend that investors purchase bonds today?
Explain.
2. How Interest Rates Affect Bond Prices Explain the impact of a decline in interest rates on:
a. An investor’s required rate of return.
b. The present value of existing bonds.
c. The prices of existing bonds.
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.