Financial markets homework
oryan.xamab
intt_474_final_exam_questions_2016.docINTT 474 (Final Exam 27 May 2015)
Name and Student Number:
“I will not cheat and I will not let others cheat” / Signature:
INTT 474 (Final Exam 21 May 2016)
Name and Student Number:
INTT 474 (Final Exam 21 May 2016)
Name and Student Number:
2. (10 points) Please debate on the Central Banks’ independence (pro and cons based on viable economics theories). And explain briefly how Fed and ECB are structured to maintain a certain level of independence.
Answer for Question # 2:
1. (10 points) Please comment on insider trading and asymmetric information in financial markets by addressing concepts like adverse selection and moral hazard problems in both debt and equity markets. And what tools can be advised to solve these problems. I’d like you also comment on the current bankers’ pay (salaries + bonus) debate in various countries.
Answer for Question # 3:
2. (20 points total 10 points each) Please comment on the following terminology (keep your answers with a max 100 words for each)
a) Time inconsistency problem for monetary policymakers and the role of nominal anchors in dealing with that issue.
b) Options for Central Banks in dealing with asset-price bubbles; how can and should they respond to bubbles?
Answer for Question # 4:
3. (10 points) Serkan Bey and his lovely spouse wish to purchase a boat in 8 years when they retire. They are planning to purchase the boat using proceeds from the sale of their property which is currently worth $90,000 and its value is growing at 7 percent a year. The boat is currently worth $200,000 increasing at 5 percent per year. In addition to the value of their property. How much additional money should they deposit at the end of each year in an account paying 9 percent annual interest in order to be able to buy the boat upon retirement?
Answer for Question # 5:
4. (20 points) Please read the following article and comment on it based on monetary policy options explained in our textbook. Please argue on how you would evaluate CB policies and performance under the leadership of Governor Başçı…
http://researchturkey.org/governor-basci-should-have-listened-to-assoc-prof-basci/
(Turkish: http://researchturkey.org/tr/governor-basci-should-have-listened-to-assoc-prof-basci/ )
Answer for Question # 6:
By Dr. Riza KADILAR
By Dr. Riza KADILAR
