1 How has the asset composition of savings and loan associations differed from those of commercial banks? Explain why and how this distinction have changed (or may change) over time. Savings and loan associations have traditionally concentrated in mortgage lending, while commercial banks have concentrated in commercial lending. Savings and loan associations are now allowed to diversify their asset portfolio to a greater degree and will likely increase their concentration in commercial loans
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Bangladesh Capital Market Brief History of Capital Market: • Concepts started in USA at Wall Street in 1653. • It came to South Asia in 1890. • The origin of Stock Market in Bangladesh goes back to 28th April 1954 named East Pakistan Stock Exchange association at Narayangonj. Later it was s renamed East Pakistan Stock Exchange Ltd and Trading was started in 1956. History of Bangladesh Capital Market: • East Pakistan Stock Exchange transferred in Dhaka in 1958. • In 1964
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Lecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 2: An Overview of the Financial System 1. Function of Financial Markets and Financial Intermediaries 2. Structure of Financial Markets Debt and Equity Markets Primary and Secondary Markets Exchanges and Over-the-Counter Markets Money and Capital Markets 3. Financial Instruments Money Market Instruments Capital Market Instruments
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calculator? You would need to know the bond pricing formula (BKM p.453 Equation 14.2): Bond Price=Coupon x {1-(1+y)-T}y-1 + 1000 x (1+y)-T To calculate the current yield, you would need to first calculate the bond price. However, some of the MCQ’s test your knowledge of the relationships of current yield with coupon rate and YTM. Try to answer the following questions. You should make use of the concepts in Chapter 14. No calculations required. 1. A coupon bond pays annual interest, has a par value
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Understanding Financial Concepts – Assignment I 1. Explain why market prices are useful to a financial manager Managers are interested in market prices for reasons better explain by market of economic theory. The classic market of economic theory is a call auction market where all market participants meet in one place at one time to arrive at a market clearing price through open outcry of bids and offers. In agricultural societies, these markets were often held annually, at harvest time, but
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Financial Management Chapter 5 * Future value VS present value * The present value technique uses discounting to find the present value of each cash flow at the beginning of the project. t=0 * The future value technique uses compounding to find the future value of each cash flow at the end of the project’s life * The future value equation * ( * FVIF is the FV of 1 dollar at i% per annum after n periods * Future value DEPENDS on the number of periods in which interest
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asset is an intangible asset whose value is derived from a contractual claim, such as bank deposits, bonds, and stocks. (5). Real assets: Real assets include precious metals, commodities, real estate, agricultural land and oil. (6). Mutual Fund: An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. (7). Closed-end fund: A closed-end fund is a publicly
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(1.05/0.07) = $28.50 b) Using 15 percent 1.90 x (1.05/0.10) = $19.95 c) When a required rate of return goes up, the anticipated price goes down. In other words, the ‘better deal’ on the stock (lower price) gets you a higher overall return. Bond: a) The present value of that stream of payments is $785.45. b) When annual interest rate changes to 12.36%, i calculated the semiannual rate (which is 6%) and the present value is re-calculated as $917.59. Beta: a) Beta = (return – riskless
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following two bonds do you pick if you expect interest rates to decrease? Face Maturity Price Yield Duration Bond A: 1000 8 1000 8% 6.21 years Bond B: 1000 8 680.58 8% 8.00 years a) b) c) d) 3. Pick bond B because it has lower price. Pick bond B because it has higher duration. Pick bond A because it has lower duration. Doesn’t matter. Both have the same yield. 2. Which of the following statements is correct about the following two bonds. Bond A: Maturity = 10 years, Coupon = 9% Bond B: Maturity
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buys $100 million of previously issued IBM bonds. Prudential Insurance Co. sells $10 million of GM common stock" (Cornett, Adair, & Nofsinger, 2016, p. 154). Classify the following financial instruments as money market securities or capital market securities: Federal Funds.- Money Market Securities Corporate Bonds.- Capital Market Securities Common Stock.- Capital Market Securities Corporate Bonds.-Capital Market Securities Mortgages
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