MGEC71H3 Study Guide - Midterm Guide: Commodity Money, Current Yield, Canadian Imperial Bank Of Commerce
1 Nov 2015
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Question 1. (15 marks: what are the impacts of rising interest rates on bonds with different maturities when all bonds are purchased at par? (10 marks, why are some people puzzled by these observed phenomena? (3 marks) Question 2. (15 marks: explain what is meant by the term direct finance. Provide one example of this in action. (4 marks: explain what is meant by the term indirect finance. Provide one example of this in action. (5 marks: list and describe at least three benefits to society created/caused by financial intermediaries. (6 marks) Discuss the advantages and disadvantages of fiat money. (7 marks) Consider the following advertisement that recently appeared in various publications in. 6. 50 % return: what fixed annual 5 year gic rate makes an investor indifferent between the cibc. Explain why an average investor is indifferent to these two gics. Assume both gics are locked in (non-cashable) for the entire 5 years. (4 marks)
