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APA
Subject:
Business & Marketing
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Coursework
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English (U.S.)
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Long Questions. Business and Marketing Coursework.

Coursework Instructions:

This is the Financial Markets & institution course.
There are four long answer questions, and I want you help me to do any 3 of them.
You can write each questions about 180 words.
Thank you.
I will provide you the questions at 2:00PM.

 

DISCUSSION PROBLEMS are designed to encourage student to think critically about the real-world issues.
1. Discuss how secondary markets benefit issuers and investors. 
 2. Explain how an investor may demand a higher premium to move out of his or her preferred habitat.  Can you think of examples where this premium rises as the term-to-maturity falls?  Explain. 
 3. When the economic outlook improves, the probability of bankruptcy decreases.  Use the loanable funds theory with the appropriate supply and demand diagrams to explain what happens to the size of the risk premium between the corporate and the Treasury bonds.
 4. Consider the following Treasury bill auction and results. A total amount of $9 billion is to be issued with a noncompetitive bid of $3.44 billion.
Bidder A B C D E
Amount ($ billion) 0.79 1.36 2.21 1.52 4.22
Bid (yield %) 7.56 7.59 7.61 7.62 7.65
Define the stop yield.  At what yield will a winning bidder be awarded securities?  If a bidder bids for $10 million at the stop yield, how much will he or she be awarded?  What is the bid-to-cover ratio for this auction?     

Coursework Sample Content Preview:
DISCUSSION PROBLEMS are designed to encourage student to think critically about the real-world issues.
1.Discuss how secondary markets benefit issuers and investors.
In the secondary markets, preowned securities, which are not new issues are traded, and this market provides liquidity to these instruments for the long-term instruments. While the initial issuers are found in the primary market, there is grade of securities that have already been issued. Financial securities are issued on the primary market and traded in the secondary market, and the liquidity of the secondary market supports trading for the issues. The first buyer sells to another investor through the secondary market and get money in return.
The secondary market is beneficial for the investors that seek returns at the market values as quickly as possible. Besides the return benefits to the investors, they can also purchase securities with different risks. The holders of issued securities trade or transfer these securities to other investors interested in their acquisition through the secondary markets .The secondary markets are mainly the stock exchanges selling equity shares, the fixed income markets, the futures and options market. The secondary markets disseminate relevant information to ensure transparency and make it easier for investors to make investment decisions.
2.Explain how an investor may demand a higher premium to move out of his or her preferred habitat. Can you think of examples where this premium rises as the term-to-maturity falls? Explain.
The higher premium theory focuses on the investment behavior of bond buyers, where the individual investors have a preferred range of bond maturity lengths, to move out of his or her preferred habitat are promised a higher return. Habitats relate to the preferred investment horizons where the interest rates are closely linked to the demand and supply of the securities in the bond market. Investors have a preference to different maturities and risks associated including preference for shorter-term bonds over the long-term bonds.
The yield curve reflects the yields (interest rates) of bonds plotted over different maturity dates. The premium ris...
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