MBA First Semester, 2010 Management of Financial Institutions Course Code # 505 Internal Evaluation # 1 Set # 1 1.

Primary market facilitates the issuance of new securities, whereas secondary markets not, explain. 2. Financial markets can be distinguished by the maturity structure, explain. 3. Why does an organization need active secondary market? 4. Why do net severs provide their net savings to the financial market? Set # 2 1. Financial Markets and Institutions play role as issuer of securities as well as borrower of money? 2. Financial markets can be distinguished by the trading structure, explain. 3. Why does investors prefer liquid securities? 4. What is the ultimate output of an inactive secondary market? Set # 3 1. Explain whether you are acting as surplus unit or a deficit unit in your relationship with each financial institution. 2. Who are the potential customers of money market and capital market? 3. If funds were not supplied, the financial markets would not be able to transfer funds to those who need them, explain. 4. Deficit units pay interest to surplus unit, why? Set # 4 1. Primary market transactions provide fund to the initial issuer of securities, secondary market transactions do not, explain. 2. Distinguish between debt securities and equity securities. 3. How does financial institutions help corporation to grow?

4. Why do some investors prefer short-term securities or money market? Set # 5 1. The return is necessary to ensure the flow of funds to financial market, explain. 2. If an organization will be an active secondary market, what will the benefits of that organization? 3. Financial markets transfer funds from those have excess funds to those who need funds, explain 4. Which market is better primary or secondary? Internal Evaluation # 2 1. Corporate finance involves decisions such as how much funding to obtain and how to invest the proceeds to expand operations, explain. 2. What do investors assess at the time of investing in stocks? 3. Why does money market security generally have a relatively high degree of

liquidity but low degree of risk? Explain. 4. When do debt securities risky? 5. The valuation of a security is measured as the present value of its expected cash flows with a discount rate. Set # 2 Investment management involves decisions by investing and channels the funds to corporation, explain. The market price of the stock serves as a measure of how well each publicly traded firm is being managed by its managers, do you agree? Why or why not? Distinguish between bonds and mortgages. Which security is more benefited to the investors, debt or equity? Why? Investors rely mostly on economic or industry information to value a security, explain. Set # 3 1. The financial markets attract funds from investors and channel the funds to corporation, explain. 2. Equity securities are risky because their values depend on the future performance of the firm, explain. 3. Can debt securities be sold in secondary market? How? 4. Some derivative securities allow investors to benefit from an increase in the value of the underlying assets, explain. 5. At the time of valuation of security discounting rate is very important, how? Set # 4 1. How do the decisions by the managers of publicly traded firms affect a firms performance and stock price? 2. The issuer of a security has to price the security such that the expected return is sufficient to compensate for the risk, explain. 3. The price of debt securities can never change over time, do you agree? Why or why not? 4. Some derivative securities allow investors to benefit from a decrease in the value of the underlying assets, explain. 5. What are the factors that make impact on the valuation of securities? Set # 5 1. Some investors look for firms that are currently undervalued and have the potential to improve, do you agree? Why or why not? 2. There is a positive relationship between the risk of a security and the expected return, explain by example. 3. When do equity securities may experience negative return? 4. Explain about the speculation and risk management concept in case of derivative security. 5. Which information is important to the investors, external or internal? Why? Internal Evaluation # 03 Why does efficient market call efficient market? What problems are seen in imperfect financial market?

Differentiate between commercial bank and savings institutions. What are the main sources and uses of funds of commercial bank? What is the impact of interest rate on the household demand for loanable fund? Analyze by an example. Set # 2 What is the effect on securities of having efficient market? Mentions the reasons for the popularity of depository financial institutions. Differentiate between credits unions and mutual fund. What are the main sources and uses of funds of mutual fund? What is the impact of interest rate on the business demand for loanable fund? Analyze by an example. Set # 3 In efficient market, securities are rationally priced, do you agree? Why? Accept the risk on loans provided is one of the reasons for the popularity of depository financial institutions, why? Differentiate between the features of depository financial institutions and non depository financial institutions. What are the main sources and uses of funds of savings institutions? What is the impact of interest rate on the government demand for loanable fund? Analyze by an example. Set # 4 What is asymmetric information? Depository financial institutions diversify their loans among numerous deficit units, why? Differentiate between insurance companies and pension funds. What are the main sources and uses of funds of money market? What is the impact of interest rate on the foreign demand for loanable fund? Analyze by an example. Set # 5 Mention the merits of perfect financial market. Why does savings institutions are referred as thrift institutions? Differentiate between savings institutions and credit unions. What are the main sources and uses of funds of pension fund? What is the impact of interest rate on the municipal demand for loanable fund? Analyze by an example Internal Evaluation # 04 Set # 1 1. The willingness of the borrowers to borrow more funds at any given interest rate reflects an outward shift in the demand schedule. Explain with graph. 2. How does inflationary expectation affect interest rate? 3. Why does central bank follow money market policy? 4. What is crowding-out effect? 5. When the inflation rate is lower than anticipated, the real interest rate relatively high. Explain by numerical sketching.

Set # 2 1. The increased supply of loanable funds supplied at any possible interest rate causing an outward shift in the supply schedule. Explain with graph. 2. If inflation rate is expected to increase, households may reduce their savings at any interest rate. Explain with numerical example. 3. What is crowding-out effect? 4. What is the impact of deficit budget on interest rate of a country? Explain. 5. How can open market operation of central bank correct weak economy and high inflation of a country? Set # 3 1. A slowdown in the economy will cause the demand schedule to shift inward, Explain with graph. 2. What proposal described by Fisher about nominal interest rate compensation? 3. What is the impact of interest rate on deficit budget of a country? Explain. 4. How can bank rate of central bank correct weak economy and high inflation of a country? 5. What is crowding-out effect? Set # 4 1. Economic growth puts upwards pressure on interest rates. Explain this with example. 2. Savers are willing to forgo consumption only if they receive a premium on their savings above the anticipated rate of inflation. Explain. 3. What is crowding-out effect? 4. When the inflation rate is lower than anticipated, the real interest rate relatively high. Explain by numerical sketching. 5. Why does central bank follow money market policy? Set # 5 1. Economic slowdown puts downwards pressure on interest rates. Explain this with example. 2. What is Fishers effect in the area of inflation? 3. When the inflation rate is higher than anticipated, the real interest rate relatively low. Explain by numerical sketching. 4. What is crowding-out effect? 5. How can open market operation of central bank correct weak economy and high inflation of a country? Internal Valuation # 05 Why does money market security generally have a relatively high degree of liquidity but low degree of risk? Explain. Mentions the reasons for the popularity of depository financial institutions. How does proper management bring success in capital market. Set # 2 At the time of valuation of security discounting rate is very important, how? Differentiate between the features of depository financial institutions and non

depository financial institutions. How do economic forces affect interest rate? Set #3 What is the impact of interest rate on the household demand for loanable fund? Analyze by an example. The valuation of a security is measured as the present value of its expected cash flows with a discount rate. Write a short not on equilibrium interest rate? Set# 4 The issuer of a security has to price the security such that the expected return is sufficient to compensate for the risk, explain. What is the impact of deficit budget on interest rate of a country? Write a short note on demand for loanable fund. Set # 5 What roles management does play for proper valuation of securities in financial market? When the inflation rate is lower than anticipated the real interest rate relatively high, explain. How can open market operation of central bank correct weak economy and high inflation of a country? Internal Valuation# 6 Write a note about Treasury Bills Set # 2 Write a note about Commercial Paper Set # 3 Write a note about Negotiable Certificates of Deposit & Repurchase Agreements Set # 4 Write a note about Money Market Securities Set # 5 Write a note about Bankers Acceptance 2011-09-22 14:43:48