FIN 402 SEU Financial Institutions and Markets Discussion

User Generated

wsynaf600

Economics

FIN 402

Saudi electronic university

FIN

Description

Q1. What factors would you consider in deciding whether or not to invest in a corporate versus a government bond

Q2. Do credit rating agencies do a good job at assessing credit risk?

Q3. Why is short selling seen as a problematic practice?

Q.4. Discuss the respective roles of primary and secondary capital markets in the financial system and outline the role of investment banks within them. What potential problems may arise if the investment bank is part of a larger bank that also includes a retail bank?

Unformatted Attachment Preview

‫المملكة العربية السعودية‬ ‫وزارة التعليم‬ ‫الجامعة السعودية اإللكترونية‬ Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University College of Administrative and Financial Sciences Assignment 3 FIN 402 (1st Term 2021-2022) Deadline: 23/12/2021 @ 23:59 Course Name: Financial Institutions and Student’s Name: Markets Student’s ID Number: CRN: Course Code: FIN 402 Semester: I Academic Year: 1442/1443 H, 1st Term For Instructor’s Use only Instructor’s Name: Students’ Grade: /5 Level of Marks: High/Middle/Low Instructions – PLEASE READ THEM CAREFULLY • • This assignment is an individual assignment. The Assignment must be submitted only in WORD format via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University ‫المملكة العربية السعودية‬ ‫وزارة التعليم‬ ‫الجامعة السعودية اإللكترونية‬ College of Administrative and Financial Sciences Assignment 2 Questions: Week 11 to Week 13: - [5 Marks] Q1. What factors would you consider in deciding whether or not to invest in a corporate versus a government bond Q2. Do credit rating agencies do a good job at assessing credit risk? Q3. Why is short selling seen as a problematic practice? Q.4. Discuss the respective roles of primary and secondary capital markets in the financial system and outline the role of investment banks within them. What potential problems may arise if the investment bank is part of a larger bank that also includes a retail bank? Cite your work… Answer:
Purchase answer to see full attachment
Explanation & Answer:
4 Questions
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Please view explanation and answer below.

1

Finance Question
Student
Institution
Professor
Course
Date

2
Finance Question
Question One
Investment is a crucial step in every organization. However, before investing in a
corporate or a government bond, individuals should consider some factors. For instance, the risk
tolerance level. It is essential for an investor to perform a risk-disposition and self-assessment
(Daniel, 2021). This determines the extent of risk one is willing to take when investing in bonds.
However, the inability of investors to identify how much risk they intended to take or avoid
makes them fail in merging the overall strategies. Additionally, factors within the risk profile
significantly impact investors' decisions (Strategic, 2021). They include the potential cost for
each risk, the overall target returns for the investment, and the negative effects of the failed
investments.
Moreover, the investors must consider keeping and sustaining the bond until maturity.
Maturity is essential in evaluating the interest rate and sensitivity of a bond. Bond maturity is
dictated in the bond indenture, which describes how the bond works and related information.
Call risk enable issuer to withdraw their bond earlier depending on rising market prices.
Furthermore, it is utilized in predicting whether the bond has any call date prior to maturity or
how the lender can make a responsible call (Daniel, 2021). Investors can easily lose the money
they have invested if they sell the bond before maturity for a lesser amount than the initial
payments.
It is important to investigate and determine whether bond coupons have a constant or
floating interest rate (Strategic, 2021). In most instances, fixed coupons provide a set ratio
related to the face value interest payment. The floating rate bond issues a variable coupon rate

3
connected to a specific benchmark rate. However, when the investment has a floating rate or
variable interest rate, implies that ...


Anonymous
Great! Studypool always delivers quality work.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags