All Matches

Solution Library

Expert Answer

Textbooks

Search Textbook questions, tutors and Books

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Tutors
Study Help
Ask a Question

Search
Sign In
Register

study help
business
money banking financial markets

Questions and Answers of Money Banking Financial Markets

An article in the Wall Street Journal notes that since 1926, stock prices have gone up more in July than in any other month. Is this “July effect”a pricing anomaly? Will you be able to earn a
What is the “greater fool theory”?
Some mutual funds have started behavioral finance funds that attempt to use insights from behavioral finance in choosing stocks. According to an article in the New York Times:Emotions cause investors
Writing in New York magazine, Sheelah Kolhatkar asks an intriguing question:[The] investment-management company Vanguard released data showing that men were more likely than women to sell stocks at
When Facebook first began selling shares of stock to the public, the price for its initial public offering (IPO) was $38 per share. After a few days of trading, the price fell to $20 per share. An
Charles Dow was the original editor of the Wall Street Journal. He was the originator of “Dow Theory,” which holds that the prices of transportation stocks, such as Heartland Express, can predict
What is a margin requirement in the futures market?
What are the three main benefits of futures contracts over forwards contracts?
Is a firm likely to have a long position in both the spot market and the futures market? Briefly explain.
An article in the Wall Street Journal on the market for coffee futures noted that on that day, “traders began to close out bets that prices would rise, or liquidate their long positions.”a. What
An article in the Wall Street Journal noted that All Nippon Airways had “reduced its oil hedging to around 40% this fiscal year from 60% in the last fiscal year in a bid to capture the lower spot
An article in the Wall Street Journal states, “Gasoline futures are falling, which could point to a drop in prices at the pump down the line.”a. What does it means to say that “futures are
An article in the Wall Street Journal discussing the nickel market contained the following:The sharp rise in nickel prices demonstrates how even a slight shift in demand and supply can roil tiny
An article in the Wall Street Journal discussed the fear that some farmers had that regulation of derivatives would make it harder for them to hedge risk. The article described the situation of a
Consider the listing below for 10-year Treasury note futures on the Chicago Board of Trade. One futures contract for Treasury notes = $100,000 face value of 10-year 6% notes.a. If today you bought
An article in Wall Street Journal in the fall of 2012 quoted an options broker as saying: “The market is relatively strong with a good couple of months this summer, so put options are expensive as
An article on the stock market observes: “To protect profits, investors can buy put options, which act as insurance, while investors who want to add exposure to the market can buy call
An article in the Wall Street Journal discussed put options on Facebook’s stock. One put option had a strike price of $25. The article observed:“Puts are contracts that give the buyer the right
Use the following information on call and put options for Facebook to answer the questions.a. What is the intrinsic value of the call option that expires in April and has a $17 strike price?b. What
An article in the Wall Street Journal noted that, “Options traders appeared to be taking a bullish approach to Target” because during the previous day they purchased 68,000 calls on the
Suppose that the Dow Jones Industrial Average is above the 13,000 level. If the Dow were to fall to 10,000, who would gain the most: investors who had bought call options, investors who had sold call
An article in the Wall Street Journal noted:“The cost of credit default swaps on Italian and Spanish government and corporate debt surged last week.” What does an increase in the price of credit
An article in the Wall Street Journal on proposals to change the regulations governing the trading of financial derivatives contained the following:The SEC and the Commodity Futures Trading
Go to wsj.com and click on “Markets” and “Market Data Center.” Under “U.S. Stocks” in the pull-down menu, click on “Listed Options Quotes.” Find the data on call and put options for
If the value of the Canadian dollar falls with respect to the euro, what will be the likely impact on European exports to Canada? Will the effect be the same on Canadian exports to Europe?
A student makes the following observation: It currently takes 80 yen to buy 1 U.S. dollar, which shows that the United States must be a much wealthier country than Japan. But it takes more than 1
If $2 buys £1 and €2.2 buys £1, how many euros are required to buy $1?
If the exchange rate between the yen and the dollar changes from ¥75 = $1 to ¥90 = $1, is this good news for Sony? Is it good news for U.S. consumers?Is it good news for U.S. firms that export to
An article observes that the high value of the yen “is dealing crippling blows to the country’s once all-important export machine.” The article also observes, though, that “a high yen
An editorial in the Wall Street Journal contains this statement: “The exchange rate is India’s most important price.”a. In what sense is the exchange rate a price?b. Why might the exchange rate
Suppose that an Apple iPhone costs $200 in the United States, £65 in the United Kingdom, and ¥35,000 in Japan. If the exchange rates are $1.50 = £1 and ¥100 = $1, what are the real exchange rates
According to an article in the Wall Street Journal: “Fund managers tend to bid up options when they expect more erratic currency movements, and sell them when the outlook is calm.”a. What does it
Suppose that Daimler AG, which manufacturers Mercedes-Benz automobiles, sells €5 million worth of automobiles to U.S. importers.Assuming that the current exchange rate is $1.22 = €1 and Daimler
What is counterparty risk? How is it different for forwards and for futures?
In a column in the New York Times, Uwe Reinhardt, an economist at Princeton, compared health care spending in Germany and the United States: “Total national health spending in Germany. . . amounted
The Economist magazine tracks the prices of the McDonald’s Big Mac hamburger in countries around the world. The following table shows the price of Big Macs in the United States and in five other
Look again at Figure 8.3 and answer the following questions.a. Why is the demand curve for foreign exchange downward sloping?b. Why is the supply curve for foreign exchange upward sloping?c. Who
According to an article in the New York Times in early 2012, “Bond yields have risen for countries like Brazil, Turkey and India, with investors preferring the safety of the dollar or yen.”
An article in the Wall Street Journal in 2012 noted that interest rates in Australia were higher than in the United States on comparable bonds. The article quoted a specialist on foreign exchange at
Borrowing at a low interest rate in one currency to lend at a higher interest rate in another currency is sometimes called a “carry trade.” An article in the New York Times describes an
An article in the Wall Street Journal in 2012 noted: “Turkey’s relatively strong economy and its attractive yields have kept emerging-market investors in the country.”a. What is an “emerging
Go to the Web site of the Federal Reserve Bank of St. Louis Federal Reserve (FRED) (http://research.stlouisfed.org/fred2/) and download monthly data on the tradeweighted exchange rate for the U.S.
What advantages do financial intermediaries have relative to small savers in dealing with the transactions costs involved in making loans? If we lived in a world in which everyone was perfectly
How has the growth of the Internet affected the problem of transactions costs and information costs in the financial system?
What are restrictive covenants? Why do investors introduce restrictive covenants into bond contracts?
Explain how incentive contracts help to reduce the problem of moral hazard.
At a used car lot, a nearly new car with only 2,000 miles on the odometer is selling for half the car’s original price. The salesperson tells you that the car was “driven by a little old lady
An article in the Economist magazine observes:“Insurance companies often suspect the only people who buy insurance are the ones most likely to collect.”a. What do economists call the problem
An article in the Economist magazine on crowd-funding argued: “Start-ups are especially needy now, since many banks are loth to lend even to well-established companies.”a. Why might banks be
Brett Arends, a columnist for the Wall Street Journal, argues: “Today you should probably view [financial firms selling investments] the way you view someone selling a used car.” How should you
Yves Smith runs the popular financial blog nakedcapitalism.com. In one of his postings, he noted: “Amex [American Express] is offering very hefty balance reductions (20%) to business accounts who
Briefly explain in which of the following situations moral hazard is likely to be less of a problem.a. A manager is paid a flat salary of $150,000.b. A manager is paid a salary of $75,000 plus 10% of
A news story reported that the former CEO of homebuilder KB Home was convicted “of four felony counts in a stock option backdating scam.”The article goes on to note:A stock option allows an
After a report appeared that many projects financed through crowd-funding site Kickstarter failed to meet their completion deadlines, an article in Bloomberg Businessweek noted: “The company says
How does the use of collateral help to reduce the problem of adverse selection?
Explain how the use of net worth helps mitigate the chances of adverse selection in corporations.
If everyone were perfectly honest, would there be a role for financial intermediaries?
An article in the Wall Street Journal made the following comment on the surge in corporations selling long-term bonds in 2012: “For investors, the longer maturities provide better returns than
In this chapter we learned that the net worth of a firm is called shareholders’ equity. In the context of a bank the shareholders’ equity is usually called the bank’s capital. Briefly explain
What is correspondent banking? Explain why this function has diminished in importance.
In 1960, federal regulations prohibited banks from paying interest on checking accounts. Today, banks are legally allowed to pay interest on checking accounts, yet the value of checking accounts has
An article in the Wall Street Journal in 2012 noted: “A battle over who gets stuck with tens of billions worth of bad housing loans made during the boom years explains why many Americans still
What do you understand by repurchase agreements?Explain how banks use repurchase agreements as a source of business funds in the financial market.
Why might the managers of a bank want the bank to be highly leveraged? Why might the bank’s shareholders want the bank to be less highly leveraged?
An article in the Wall Street Journal noted that new federal banking regulations “mean only a 5 percent reduction in [bank] revenue … from households with $500,000 in assets or more compared with
An article in the Wall Street Journal argues that for investors to continue to see banks as good investments, the banks need an ROE of at least 12%. The average ROE for U.S. banks in 2012 was only
What do you understand by the term “credit scoring systems”? How do banks use them?
What is the prime rate? What kind of loans is it charged on?
What is the Federal Reserve Act? What did it establish?
What is the VAR approach?
What is the Volcker Rule? When and why was it created?
Evaluate the following statement:The United States has more than 6,000 banks, while Canada has only a few. Therefore, the U.S. banking industry must be more competitive than the Canadian banking
In 2012, an article in the Wall Street Journal described how Amazon had begun making loans to the small businesses that sell on its site. Many of these businesses had previously been turned down for
A bank analyst was quoted as saying:“There are very real expenses to owning and operating ATMs…. In the current environment, banks are unable to support the cost structure they have
Explain the role of investment banks as underwriters, and explain the term “syndicate” in this context.
What became of the large, standalone investment banks during the financial crisis of 2007–2009?
An article in the Economist magazine says about investment banks: “By unlocking the capital markets and helping firms to manage risks, investment banks are important conduits of credit.” How do
In 2005, before the financial crisis, Timothy Geithner, who was then president of the Federal Reserve Bank of New York, thought that leverage at hedge funds was rising, “probably because of
What are the key differences between open-end and closed-end mutual funds?
What is financial engineering? How does it help a business firm?
When Chrysler Corporation was considering setting up its own auto finance company, it sent a memo to its dealers that contained the following:“Chrysler Group is in private discussions with multiple
An article in the Economist magazine remarks that the average hedge fund is unlikely to earn more than the average mutual fund, and “since their fees are higher, the result will be disappointing
A New York Stock Exchange (NYSE) publication asks the question: “Do all investors fully understand the riskier characteristics of hedge funds as they pursue potentially greater returns?”a. What
What are the main characteristics of exchangetraded mutual funds? How are they different from no-load funds?
Explain the different ways in which finance companies act as financial intermediaries. Name the different types of finance companies.
An article in the New York Times observes that 401(k) plans:have largely supplanted traditional pensions and become the central pillar of America’s employer-sponsored retirement system, with 60
Why do pension funds have vesting periods? Do vesting periods have any advantages to employees relative to a system where new hires are eligible to participate in a pension plan right away?
Insurance companies never know the exact amounts of their future payouts. So, why do they hold large amounts of long-term, relatively illiquid assets, such as corporate bonds, that may be difficult
In a speech in October 2012, Federal Reserve Governor Daniel Tarullo made the following observation:“Money market funds remain a major part of the shadow banking system and a key potential systemic
Gary Gorton, a professor at Yale University, has compared repurchase agreements used by shadow banks to bank deposits in commercial banks. He notes: “If the depositors become concerned that their
In 2009, Congress and the president set up the Financial Crisis Inquiry Commission to investigate the causes of the financial crisis. At a hearing of the commission in 2010, Robert Rubin—who had
What is a financial crisis?
What is contagion? Explain how it is related to a bank run.
What is a pegged exchange rate? How does pegging against a foreign currency lead to a crisis?
An article in the Economist on the Dodd-Frank Act noted the following about a provision of the act that would require that trading in some derivatives be moved from over the counter to exchanges:The
In 2012, the euro-zone countries began the process of increasing the integration of their banking systems by giving the European Central Bank the authority to supervise banks in all member countries.
In 2012, some economists and policymakers continued to worry about the state of the European financial system. An article in the Economist magazine commented on the actions of the European Central
In 2012, as speculation increased that Greece might stop using the euro as its currency, the Wall Street Journal published an article that included this observation: “The Continent’s financial
In 2010, an article in the Wall Street Journal observed:In the bond market . . . investors have been flocking to all manner of [bonds] . . . from Treasuries to “junk” bonds. The attraction:
Briefly discuss the role envisaged for the Consumer Financial Protection Bureau in the aftermath of the financial crisis.

Showing 200 - 300 of 1701

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Last

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Campus Ambassador

Company Info

Security
Copyrights
Privacy Policy
Terms & Condition
SolutionInn Fee
Scholarship

Services

Sitemap
Fun
Definitions
Become Tutor
Study Help Categories
Recent Questions
Expert Questions

Copyright © 2024 SolutionInn All Rights Reserved.

Get the SolutionInn - Study Help App