Economics Homework Help

Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link.

1. Describe an economic trade-off faced by the Fed in achieving its economic policy objectives.
2. What are recognition and implementation lags? How do these influence security prices?
3. Why might the Fed’s monetary policy depend on the fiscal policy that is implemented?
4. Stock market conditions serve as a leading economic indicator. Assuming the U.S. economy is in an expansion, what are the implications of this indicator? Why might this indicator be inaccurate?
5. Assess the economic situation today. Is the current administration more concerned with reducing unemployment or inflation? Does the Fed have a similar opinion? If not, is the administration publicly criticizing the Fed? Is the Fed publicly criticizing the administration? Explain.
6. What type of organization issues commercial paper? Given the short-term nature of commercial paper, why would ratings agencies assign ratings to them?
7. The maximum maturity of commercial paper is 270 days. Why would an organization issue commercial paper rather than longer-term securities, even if it needs funds for a long period of time?
8. Assume an investor purchased a three-month T-bill with a $10,000 par value for $9,500 and sold it 45 days later for $9,600. What is the yield?
9. A money market security that has a par value of $10,000 sells for $8,924.70. Given that the security has a maturity of two years, what is the investor’s required rate of return?
10. A U.S. investor obtains British pounds when the pound is worth $1.30 and invests in a one-year money market security that provides a yield of 4 percent (in pounds). At the end of one year, the investor converts the proceeds from the investment back to dollars at the prevailing spot rate of $1.32 per pound. Calculate the effective yield.
11. Briefly explain the securitization process and include at least one reason why a bank would consider using this.
12. Briefly compare and contrast a collateralized mortgage obligation with a collateralized debt obligation.
13. Provide at least two reasons why blame for the credit crisis is a challenge to assign to one particular group alone.
14. Provide at least one reason why the government felt compelled to pass the Troubled Asset Relief Program (TARP). What is your conclusion regarding the effectiveness of this?
15. Briefly identify one key component of the Financial Reform Act and why you think it may or may not be effective.
16. Identify two reasons why an investor would prefer common stock to preferred stock.
17. What is book building and does it benefit investors or the issuing corporation, in your opinion?
18. What benefit do investors realize as a result of an extended trading session? What might be a downside to using this session?
19. You are a fund manager and are dissatisfied with one of the companies in your portfolio. You have decided shareholder activism is an appropriate strategy. Select one approach from the material to use and briefly note why you selected it.
20. Chatter Corporation issued the following quarterly dividends last year: $0.15, $0.17, $0.20, and $0.25. The current stock price is $24.59. What is the dividend yield for this stock using this information?