Chapter 1: 3B (page 50)
What features of money market securities distinguish them from other fixed-income securities?
They are very short term, highly marketable and carry minimal gain or loss.
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How does a municipal revenue bond differ from a general obligation bond? Which would you expect to have a lower yield to maturity?
What is meant by the LIBOR rate? The Federal funds rate?
What are some differences between hedge funds and mutual funds?
Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What is the agency problem this practice engendered?
Consider the following limit order book for a share of stock. The last trade in the stock occurred at a price of $50.
a. If a market buy order for 100 shares comes in, at what price will it be filled?
b. At what price would the next market buy order be filled?
c. If you were a security dealer, would you want to increase or decrease your inventory of this stock?
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