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##### Assess the regulatory environment faced by brokerages and investment

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**Question**

Assess the regulatory environment faced by brokerages and investment banking firms. Do you consider this environment to be highly regulated, moderately regulated or unregulated. Justify your response.;Compare and contrast credit risk with liquidity risk.;Describe the size, structure and composition of the mutual fund industry. Do you consider these characteristics as having a positive or negative impact on investors? Why?;An investment bank pays $ 23.00 for 4 million shares of JC Co., and then resells them for $ 25 per share. How much money does JC receive? What is the profit to the investment bank?;An investment bank pays $ 20.50 per share for 3 million shares of X. It then sells these shares to the public for $ 22.50 per share. How much money does X receive? What is the profit to the investment bank? What is the stock price of X?;A mutual fund owns 500 shares of X currently trading at $ 12, and 300 shares of Y, currently trading at $ 24. The fund has 900 shares outstanding.;What is the Net Asset Value of the fund?;If investors expect the price of X shares to increase to $ 14, and Y shares to decrease to $ 23, at the end of the year, what is the new NAV?;Assume that the expected price of X shares is realized at $ 14. What is the maximum price decrease that can occur to Y to realize an end of year NAV equal to the NAV estimated in (a).;Assume that a bank has assets located in the EU worth 101 million euros, on which it earns an average of 9% per year. The bank has 76 million Euros in liabilities on which earns an average of 5% per year. The spot exchange rate is 0.76 euros/$.;If the exchange rate at the end of the year is 0.79euros/$, will the dollar have appreciated or depreciated against the euro?;Given the change in the exchange rate, what is the effect in dollars on the net interest income from foreign assets and liabilities?;Consider the following balance sheet for X Savings (in milllions).;Assets;Floating rate mortgages $ 40;(Currently 9% annuall7);30-year fixed rate loans;(Currently 6% annuall7) 40;Total Assets 80;Liabilities and Equity;1-year time deposits;(currently 5% annually) $ 50;3-year time deposits;(Currently 7% annually) 20;Equity 10;Total liabilities and equity 80;What Is X?s expected net interest income at year end?;What will net interest income be if interest rates rise by 1 percent?;Using the cumulative repricing gap model, what is the expected net interest income for a 1 percent increase in interest rates?;What will net interest income be at year end if interest rates on rate sensitive assets increase by 1% but interest rates on rate sensitive liabilities increase by 0.5%?

Paper#27811 | Written in 18-Jul-2015

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