1. Mortgage Rates and Risk What is the general relationship
between mortgage rates and long-term government security rates? Explain how
mortgage lenders can be affected by interest rate movements. Also explain how
they can insulate against interest rate movements.
2. Secondary Market Compare the secondary market activity
for mortgages to the activity for other capital market instruments (such as
stocks and bonds). Provide a general explanation for the difference in the
3. Financing Mortgages What types of financial institution
finance residential mortgages? What type of financial institution finances the
majority of commercial mortgages?
4. Mortgage-Backed Securities
Describe how mortgage-backed securities (MBS) are used.
5. Amortization Use an amortization
table (such as www .bloomberg.com/invest/calculators/index.html) that deter-
mines the monthly mortgage payment based on a specific interest rate and
principal with a 15-year maturity and then for a 30-year maturity. Is the
monthly pay-ment for the 15-year maturity twice the amount for the 30-year
maturity or less than twice the amount? Explain
6. Shareholder Rights Explain
the rights of common stockholders that are not available to other individuals.
7. Prospectus and Road Show Explain the use of a prospectus developed
before an IPO. Why does a firm do a road show before its IPO? What factors
influence the offer price of stock at the time of the IPO?
8. NYSE Explain why stocks
traded on the New York Stock Exchange generally exhibit less risk than stocks
that are traded on other exchanges.
9. Role of IMFs How have
international mutual funds (IMFs) increased the international integration of
capital markets among countries?
10. Dividend Yield Over the
last year, Calzone Corporation paid a quarterly dividend of $0.10 in each of
the four quarters. The current stock price of Calzone Corporation is $39.78.
What is the dividend yield for Calzone stock?
11. Assess the credibility of
the behavioral critique of the efficient market hypostasis. Provide support for
12. Examine the results of
technical analysis, and determine whether or not it works. Support your answer.
13. From the second
e-Activity, consider your chosen company is pondering an IPO in the next six months.
Second E-Activity - Research the Internet to find a stock of your
choice to determine if the stock is fairly valued. Be prepared to discuss.
Develop a strategy for the chosen company to
meet its stated objective.
14. Take a position on the
following statement: Investors should avoid investing in any penny stock.
Support your position with evidence or examples.
15. Speculate as to why an
investor may buy into the bond market when prices are dropping. Provide support
for your rationale. Determine two reasons that the stated yield to maturity and
realized compound yield to maturity of a default free zero coupon bond must
always be equal. Support your answer with examples.