Project #52182 - financial institutions

1. Interest Rate Swaps (see enclosed article IRS Problems on Orlando Expressway) Explain using an example, (please, not the IBM and Apple used in class notes) “Interest Rate Swaps”? How are these used by corporations & banks to hedge risks? What are the risks involved in Interest Rate Swaps.? Are Swaps optimal for risk transfer for banks? Would you recommend that Municipalities and local Governments use IRS to hedge risks? 2. What are the required conditions and metrics for the growth and development of a nation’s financial markets? Based on these, evaluate the Financial Markets of one “specific country” using the standard metrics. 3. What does Securitization of assets mean? What are its costs and benefits for financial institutions? Why has this market experienced such a tremendous growth in the United States over the prior decades? Why was it a major concern for financial markets in the summer of 2007? Why did it cause a global crisis? What are its future prospects? 4. You have been hired as a bank loan consultant by MIAMI-BANK and they want your input in setting loan rates for new ten year mortgages. Based on what you have learnt in this course, and using an assumed numerical example, Explain, step-by-step how you would develop the new mortgage rate? Compare the mortgage rate you developed with the rate quoted by two leading financial institutions. 5. On June 7, 2012, The US Federal Reserve signed off on proposed new regulations to bring US banks in line with the Basel III global standards, aimed at giving banks more crisis-resistant footings. The US rules will give bank holding companies and savings and loans companies with at least $500 million in assets until 2019 to meet the new capital rules. A. What are the potential challenges in Implementing Basle III standards for American Financial Institutions by 2019? B. How is Basle III different from Basle II and what additional requirements it imposes on individual institutions? C. What are its implications for overall global financial stability? D. What are the major arguments of US Institutions against its implementation? 6. Explain in your own words what is ‘Value at Risk’? Basle recommends using V@R to measure varied risks. Using an assumed example, show how this concept helps financial institutions manage interest rate risk? What are its uses and advantages? What are its limitations? How reliable is this measure? I am looking for YOUR Ideas, Opinions, Views and Comments and Arguments based on what we discussed in class. Independent work is expected. Violators will be subject to maximum penalty. CUT AND PASTE JOB from the Lecture Note, Book or Internet will result in minimum grade. Extra research is expected & rewarded. If external work is quoted, identify with suitable references. In Essay questions suggested length is Minimum one page per Question /Problem; Maximum two pages. Quality, rather than quantity will be the basis for evaluation. Please be very precise, specific and direct in your answers. No STORIES please. Wherever required use equations/formula, and graphs/diagrams; be sure to identify the different variables. In calculations, approximate to two decimal places.

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Due By (Pacific Time) 12/16/2014 02:00 pm
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