Question

1. Describe the role of the financial system in brief?

2. Describe the relationship of global economy and the financial system in brief?
3. Describe the financial assets, money and financial transaction?
4. Describe, compare and contrast the three methods of fund transfers (direct Finance,
Semi direct finance and indirect finance)?
5. Describe the Advantage of financial institutions in the financial system
6. Describe the Types of Financial intermediaries
7. Describe the relationship of depository, non-depository and investment institution and identify the difference in each title?
8. List and describe the four types of credit market instruments?
9. Describe the distinction between interest rates and returns?
10. Describe the similarity and relation of nominal and real interest rates?
11. Define the money markets and write the characteristics of money market securities
12 Briefly describe the 6(six) money market securities with best example
13. Assume ABC CO. borrows $ 100,000 from a bank and yield to maturity is 12%, if the loan is paid at end of;
a. One year, what will be the amount of money to be paid at end of one year?
b. Ten year, what will be the amount of money to be paid at end of ten year?
c. Twenty years, what will be the amount of money to be paid at end of twenty year?
14. Assume ABC CO. take out a $ 100,00 mortgage loan from a bank, what is the yearly
payment to the bank to pay off the loan, if;
a. The interest rate is 9.5% and the maturity is 10 years?
b. The interest rate is 13.5% and the maturity is 20 years?
c. The interest rate is 17.5% and the maturity is 30 years?
15. Assume you purchase a 10% coupon bond with a face value of $ 100,000 and five years to maturity, what will be the price of the bond, if;
a. Market interest rate (yield to maturity) is 13%?
b. Market interest rate (yield to maturity) is 10%?
c. Market interest rate (yield to maturity) is 7%?

Answer 1

1.A financial system is an economic arrangement wherein financial institutions facilitate the transfer of funds and assets between borrowers, lenders, and investors.

2.Finance and Economics are related, but not identical disciplines. Economics studies local or global markets, human behaviour, goods and services, etc. Finance focuses on financial systems and everything related: banks, loans, investments, savings, etc. Both disciplines open the doors to well-paid and in-demand jobs.

3.A financial asset is a liquid asset that gets its value from a contractual right or ownership claim. Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets.