question archive (a)Typically you will receive a very low interest rate on a money you deposit on a bank,interest rate on a car loans ,and business loans are much higher
(a)Typically you will receive a very low interest rate on a money you deposit on a bank,interest rate on a car loans ,and business loans are much higher
Subject:FinancePrice: Bought3
(a)Typically you will receive a very low interest rate on a money you deposit on a bank,interest rate on a car loans ,and business loans are much higher.why,then,do most people prefer putting their money in a bank to lending it directly to individuals or businesses? (b) suppose financial intermdiaries did not exist and only direct finance were possible.How would this affect the process of an individual buying a car or a house? ©In late 2009, Amazon introduced payphrase, an electronic payment system intended to compete with paypal. Less than three years later,in early 2012,amazon discontinued this program.paypal is by far the largest economic system.what problems might competitors encounter in trying to set up a competing system? (D) According to an article ,in the economist,' Zimbabwe abandoned its worthless currency not long after monthly inflation hit 80 billion Percent in November 2008. Zimbabwens now use american Dollar" the article also notes that the average income in zimbabwe had fallen by two- third, but after the country abandoned its currency for the U.S dollar, economic growth began to occur. • Why would zimbabwe abandon its own currency to begin use U.S dollars? • Why would using the U.S dollar as its currency have enabled the economy of zimbabwe to resume growing? • What potential problems could use U.S dollar rather than its own currency pose for the Zimbabwen government? (e) In each of the following parts, describe an expression that shows the relationship among the listed terms: • The price of a coupon bond, coupon payments ,the face value, the yield to maturity. • The amount borrowed on a simple loan ,the required loan payment, and the yield to maturity. • The price of a discount bond,the bonds face value,and the yield to maturity. • The amount borrowed on a fixed payment loan ,the payments on the loan ,and the yield to maturity. • Briefly explain why bonds have the same maturities often do not have the same interest rates. • How is a bonds rating related to the bonds issuer's creditworthiness? • How does the interest rate on an illiquid bond compare with the interest rate on a liquid bond?how does the interest rate on a bond with high information cost compares with the interest rate on a bond with low information costs? (F) According to Moody's, "obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk". • What "obligations"is Moody referring to? • What does Moody's mean by credit risk? (G) Briefly explain why a country without a robust financial system might struggle to achieve high rates of economic growth. (H) what is the difference between moral hazard and adverse selection ? Explain the "lemons problem" . how does the lemon problem lead many firms to borrow from banks rather Than from individual investors? (I)why was the securities and exchange commission (SEC) founded? What effect has the SEC had on the level of assymetric Information in the U.S financial system? (J)Discuss the steps banks take to manage liquidity risk, credit risk,interest rate risk. (K)what is credit report? What is credit score? Explain in brief. (L)List four off balance sheet activities and briefly describe why its become so widespread in banking industry? (M)what are the key development in banking in recent time?how it becomes so crucial for economic growth and development in the world? Give valid arguments with example.
