Answered>Order 21706
- Refer to page 49. Comment on the size, structure and composition of savings institutions. Do you think that the outlook for the industry is positive or negative ? Why ?
- Evaluate the classes and subclasses of life insurance by comparing their benefits and risks.
- Assess the regulatory environment faced by brokerages and life insurance companies. Do you consider this environment to be highly regulated, moderately regulated or unregulated. Justify your response.
- Compare and contrast credit risk with liquidity risk.
- Describe the size, structure and composition of the mutual fund industry. Do you consider these characteristics as having a positive or negative impact on investors ? Why ?
- An investment bank pays $ 23.00 for 4 million shares of JC Co., and then resells them for $ 26 per share. How much money does JC receive? What is the profit to the investment bank ?
- An investment bank pays $ 20.50 per share for 3 million shares of X. It then sells these shares to the public for $ 22.50 per share. How much money does X receive ? What is the profit to the investment bank ? What is the stock price of X ?
- A mutual fund owns 500 shares of X currently trading at $ 12, and 300 shares of Y, currently trading at $ 24. The fund has 850 shares outstanding.What is the Net Asset Value of the fund ?If investors expect the price of X shares to increase to $ 14, and Y shares to decrease to $ 23, at the end of the year, what is the new NAV ? Assume that the expected price of X shares is realized at $ 14. What is the maximum price decrease that can occur to Y to realize an end of year NAV equal to the NAV estimated in (a)
- Assume that a bank has assets located in the EU worth 101 million euros, on which it earns an average of 9% per year. The bank has 76 million Euros in liabilities on which pays an average of 5% per year. The spot exchange rate is 0.76 euros/$. If the exchange rate at the end of the year is 0.79euros/$, will the dollar have appreciated or depreciated against the euro ? Given the change in the exchange rate, what is the effect in dollars on the net interest income from foreign assets and liabilities ?
- Consider the following balance sheet for X Savings (in milllions).
Assets
Floating rate mortgages $ 40
(Currently 9% annually)
30-year fixed rate loans
(Currently 6% annually) 40
Total Assets 80
Liabilities and Equity
1-year time deposits
(currently 5% annually) $ 50
3-year time deposits
(Currently 7% annually) 20
Equity 10
Total liabilities and equity 80
What Is X’s expected net interest income at year end ? What will net interest income be if interest rates rise by 1 percent ? Using the cumulative repricing gap model, what is the expected net interest income for a 1 percent increase in interest rates ? What will net interest income be at year end if interest rates on rate sensitive assets increase by 1% but interest rates on rate sensitive liabilities increase by 0.5% ?