MONEY BANKNG FINANCE

___ 2. Which firm has largest amount of loans outstanding?

___ 3. Which firm has the smallest amount of loans outstanding

___ 4. _____ loans / deposits ratio is 66%

___ 5. Citigroup loans/deposits ratio is greater than BofA loans/deposits ratio

___ 6. Which firm has largest debt securities / deposits ?

___ 7. GS chooses to have more assets in debt securities than in loans

___ 8. For Commercial Banks deposits with the bank are

___ 9. For Commercial Banks loans and debt securities that are to be paid to the Bank

Question 7 of 10

Bonds and Yields:

A: 3 year US Treasury note

B: Startup firm's bond

Type A or B

Which bond will you choose if you need cashflow every year for the next 3 years? Bond____

Which bond has a cheaper present value? Bond____

Which of these bonds is a zero coupon bond? Bond____

If you were a bank regulator which of these investment would you weight to have more risk? Bond____

Which bond has a lower chance of default? Bond____

Question 8 of 10

Compare the following Bonds

Bond A: 20 year bond selling for $950 with coupon of 4% and face $1,000.

Bond B: 1 year bond selling for $950 with coupon of 1% and face $1,000

A. discount

B. Bond A

C. TRUE

D. TRUE

E. FALSE

F. FALSE

G. FALSE

H. FALSE

I. Bond A

J. premium

K. Bond B

L. TRUE

___ 1. These bonds are selling at , discount, premium or par?

___ 2. Which $1,000 face value bond has higher yield to maturity ?

___ 3. Current yield is a better approximation for the 1 yr bond YTM than for the 20 year bond YTM?

___ 4. If interest rates are expected to increase which bond has more risk ?

___ 5. If the 1 year bond price drops to $500 it's YTM > 20 yr priced at $950 YTM?

___ 6. If interest rates are expected to decrease over time which bond would you prefer ?

___ 7. If the 20 year bond price increased to $2000, the YTM is negative?

___ 8. Looking at current yield formula , current yield can be negative ?

___ 9. If you buy the 20 year bond today for $950 and sell it next year for $1,200, this bond is sold at

___ 10. If you buy the 20 year bond today for $950 and sell it next year for $1,200 the return is 29.47%

___ 11. If you buy the 20 year bond today for $950 and sell it next year for $1,200 the return on your bond is equal to the YTM

___ 12. In order for either of these bonds to have yield equal to coupon, the price must be greater than face value?

Question 9 of 10

Treasury Yield curves

Type T or F

___ Prior to 2008, Oct yield curves were normal shaped

___ Oct 2012 30 yr yield was greater than 2011 30 yr yield

___ Oct 5 yr yields have strickly decreased since 2006

___ In 2015 QE stopped and all short term yields increased from 2015-2016

___ All 2017 term yields are higher than 2016 term yields

___ Overall Short term rates decayed most from 2006 – 2017

Question 10 of 10

Extra Credit

A. South Sea Bubble

B. Tulipmania

C. Both

D. Neither

___ 1 This asset was a share of a startup firm and had tax advantages on dividends

___ 2. This asset bubble popped when demand for asset dropped

___ 3. Middle class social status was measure by this asset

___ 4. This asset was measurement of aristocracy

___ 5. This asset was a physical asset and had potential supply constraints that many physical assets have

___ 6. Which bubble had an investor speculation attribute

___ 7. This asset had government investment involvement and government regulation in the aftermath

___ 8. This asset had hints of firm manipulation

___ 9. This asset bubble took place in the 16th century