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Elementary,Middle School,High School,College,University,PHD
| Teaching Since: | May 2017 |
| Last Sign in: | 409 Weeks Ago |
| Questions Answered: | 66690 |
| Tutorials Posted: | 66688 |
MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Can a financial institution keep borrowers from engaging in risky activities if there are no restrictive covenants written into the loan agreement? What conflicts can develop for the financial institution when soliciting and investing the funds of private individuals? Discuss the nature of a financial institution's ethical obligation should Joe Q Investor say: "This is the investment I want and if you won’t do this for me I’ll take my money someplace else."(Objective 8.1)
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A bank issues a $100,000 fixed-rate, 30-year mortgage with a nominal annual rate of 4.5 percent. If the required rate drops to 4.0 percent immediately after the mortgage is issued, what is the impact on the value of the mortgage? Discuss ethical considerations banks should have when recommending a specific type of mortgage to a client.(8.2, 8.3)
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A bank adds a bond to its retained portfolio. The bond has a duration of 12.3 years and cost $1,109. Just after buying the bond, the bank discovers that market interest rates are expected to rise from 8 percent to 8.75 percent. What is the expected change in the bond’s value? How does this affect the asset portfolio of the bond holder?(8.3)
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Why does a lower strike price imply that a call option will have a higher premium and a put option will have a lower premium?(8.3)
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If, at the expiration date, the deliverable Treasury bond is selling for 101 but the Treasury bond futures contract is selling for 102, what will happen to the futures price? Explain your answer. What causes this change to occur?(8.2)
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Explain why greater volatility or a longer term to maturity leads to a higher premium on both call and put options.(8.1, 8.3)
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