Question 1 21691 a. What is the Capital Market? Name three instruments 2 or 3 ta b. What is indirect finance? Name three

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Question 1 21691 A What Is The Capital Market Name Three Instruments 2 Or 3 Ta B What Is Indirect Finance Name Three 1 (1.41 MiB) Viewed 74 times

Question 1 21691 a. What is the Capital Market? Name three instruments 2 or 3 ta b. What is indirect finance? Name three instruments it is indire nce Name ti VITUD UeybowWOH C. What do we mean by adverse selection? What tools can solve the problem of adverse selection? d. Name 2 types of depository institutions. e. What is M1? Explain how its parts are money. smo Question 2 1- What is the yield to maturity on a $1,100-face-value discount bond maturing in one year that sells for $850? 2- What is the yield to maturity on a simple loan for $1 million that requires a repayment of $3 million in five years' time? 3- Consider a coupon bond that has a $1,200 par value and a coupon rate of 10%. The bond is currentiy selling for $1,344 3 and has two years to maturity. What is the bond's yield to maturity? 4- What is the price of a perpetuity that has a coupon of $70 per year and a yield to maturity of 2.5%? If the yield to maturity doubles, what will happen to its price? Question 3 1. Draw the equilibrium in the bond market. Explain (curves and axes). 2- Show what happens to the price of bonds and interest rates in the following situations. Explain a. An increase in liquidity of the bond. b. An increase in expected inflation. C. An expansion in the business cycle.