City bank Swiss Bank Fix rate 4% 5% Floating rate L+2% L+4% L=1.5% today Which Bank has an absolute Adv.?( Which Market) Which Bank has a relative Adv?
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- Exercise 3: Assume you have the following quotes, calculate how a market trader at Citibank with USD 1,000,000 can make a profit from arbitrage. Banks Citibank National Westminster Deutschebank Spot rates USD 1.1188/GBP EUR 1.1461/GBP USD 0.9762/EURTestbank, Question 25 Common types of short-term finance include: O paid taxes and trade credit. accrued wages and floor-plan finance. O bank overdrafts and trade debit. O commercial bills and bank under-drafts.Financial Markets and Institutions, 8e (Mishkin) Chapter 2 Overview of the Financial System 2.1 Multiple Choice 1) Every financial market performs the following function: A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. Topic: Chapter 2.1 Function of Financial Markets Question Status: Previous Edition 2) Financial markets have the basic function of A) bringing together people with funds to lend and people who want to borrow funds. B) assuring that the swings in the business cycle are less pronounced. C) assuring that governments need never resort to printing money. D) both A and B of the above. E) both B and C of the above. Answer: A Topic: Chapter 2.1 Function of Financial Markets Question Status: Previous Edition 3) Which of the following can be described as involving direct finance? A) A corporation’s stock is traded in an over-the-counter…
- Identify under which one of the following market the issue of treasury bills lies: a.Equity Market b.Capital Market c.Foreign Currency Market d. **fast i dont have time plzMoney MarketAnswer the following statements It is an average interest rate that banks offer in the financial market: a. effective rate b. Cetes c. CPP d. TIIE It is the payment for the use of someone else's money: a. simple interest b. interests c. amount d. interest rateA bank holds a loan portfolio with the following characteristics: Loan i Xi Annual spread between loan rate and bank’s cost of funds Annual fees Loss to bank given default Expected default frequency Correlation 1 .6 6% 3% 20% 3% -0.2 2 .4 5% 2% 30% 5% Question 1: what is the return and standard deviation on loan 1? Question 2: what is the return and standard deviation on loan 2?
- A. If Nominal Interest Rate is 6% and the inflation premium is 2% the real interest rate earned by the bank is equal to B. Which tool of monetary policy appeals to the profit motive of the commercial banks to encourage or discourage lending? Edit Format Table4. Gap and Duration Analysis Take the following balance sheet, which of the assets and labilities are rate-sensitive? Which assets and liabilities are not? a. Assets Value Liabilities Value Checkable Deposits Savings Deposits Money Market Accounts 40 Long-Term Loans Long-Term Securities 75 26 100 Reserves 54 10 Variable Rate CDs 25 Short-Term Securities Variable-rate Loans 15 30 Long-Term CDs 25 b. What is the estimated rate of change of bank profit, in terms of next year's interest rate, conditional on this year's interest rate being 2%? c. Suppose that all the long-term securities that the bank holds mature in 4 years and their interest rate will be 5% in that year. What is the approximate market-value of these long-term securities in 4 years given this year's interest rate is 2%?Identify under which one of the following market the issue of treasury bills lies: a.Equity Market b.Capital Market c.Foreign Currency Market d.Money Market **fast plz
- Give typing answer with explanation and conclusion Q. 23 Why do commercial banks focus on relatively short-term loans? - b/ short term loans allow rapid turnover of cash flows - a/ short-term loans are safer - a,b, and c - c/ these banks need to coordinate their portfolio with changes in economic conditions and the level of interest rates - b and c50- Which of the following are issued by large commercial banks that can be bought and sold among investors and carry a fixed interest rate? a. Eurodollar CD b. Certificate of Deposits c. Treasury Bills d. Commercial PapersQuestion 3 Refer to the data in the table below. Suppose they are the FX rates quoted by two large banks. By Bank A Pair: EUR/USD ◆ USD/JPY ◆ GBP/USD ◆ USD/TRY + USD/CHF USD/CAD ◆ EUR/JPY ◆ AUD/USD ◆ NZD/USD a. b. e.g. Sell 1 Mio GBP versus USD (GBP/USD) C. Bid Client wants to d. Pair: EUR/USD USD/JPY GBP/USD USD/TRY 0.9282 ◆ USD/CHF 1.3479 USD/CAD 143.39 EUR/JPY 0.6856 ◆ AUD/USD 0.6230 ◆ NZD/USD 1.0652 1.0656 134.54 134.57 1.1953 1.1954 18.8580 18.8680 0.9281 1.3478 143.32 0.6855 0.6229 Assume you are the client and will choose the best rate (buy at the lower rate and sell at the higher rate) to deal with either Bank A or Bank B. Fill in the blanks below: Ask By Bank B Buy 10 Mio JPY versus USD (USD/JPY) Sell 0.5 Mio NZD versus USD (NZD/USD) Sell 0.6 Mio EUR versus JPY (EUR/JPY) Buy 5 Mio EUR versus USD (EUR/USD) Ask 1.0652 1.0653 134.57 134.60 1.1949 1.1953 18.8578 18.8678 0.9283 1.3480 143.37 0.6854 0.6229 1.1953 Bid Client deals at Client deals at what rate which bank A 0.9281…
