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. With regard to money markets and bond markets;
a)     As money market instruments, explain commercial paper and negotiable certificates of deposit.                                                                                                                            (10 marks)
b)Â Â Â Â Â Discuss the importance of bond ratings and explain the difference between an investment-grade bond and a junk bond. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â (10 marks)
c)     Examine why a STRIP security is created and evaluate its attractiveness to investors. Compare the same with a TIPS bond.                                                                                               (10 marks)
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Q2. With regard to foreign exchange marketsand derivative securities market;
a)     Explain with an example the two primary methods of hedging foreign exchange risk for a financial institution. Which one is preferred by financial institutions and why?                         (10 marks)
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b)Â Â Â Â Â Examine the importance of swap contracts and use an example to explain the difference between an interest rate swap and a currency swap. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â (10 marks)
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c)     Examine how caps, floors and collars are used by financial institutions and why they would take any of these derivative security positions.                                                                                        (10 marks)
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Q3. With regard to overview of financial institutions and stock markets;
a)Â Â Â Â Â Explain 5 unique economic functions performed by financial institutions to the suppliers of funds and the economy as a whole. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â (10 marks)
b)Â Â Â Â Â Examine the role of different types of traders in the NYSE and the importance of circuit breakers in the context of stock market trading. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â (10 marks)
Examine the role of ADRs and GDRs for investing in international stocks. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â (10 marks)
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