代写Economics 411 - Money and Banking Spring 2024 Homework 1代做Prolog

Economics 411 - Money and Banking

Spring 2024

Homework 1

Due: Feb 15, 2024.

Note: This problem set is due on February 15th, 2024 by end of day. Please type your answers and submit through Canvas directly.

Q1.  Suppose the owner of a corporation needs $1 million to finance a new investment. If his total wealth is $1.2 million, would it be better to use his own funds for the investment or to issue stock in the corporation? What if the owner's wealth is $1 billion?

Q2. Firms such as Moody's and Standard & Poor's study corporations that issue bonds. They publish ratings for the bonds - evaluations of the likelihood of default. Suppose these rating companies went out of business. What effect would this have on the bond market? What effect would it have on banks?

Q3. National credit bureaus collect information on people's credit histories. They are likely to know whether you ever defaulted on a loan. Suppose that a new privacy law makes it illegal for credit bureaus to collect this information. What effect would this have on the banking industry?

Q4. How liquid is each of the following assets? Explain each answer:

(a) Bonds issued by the U.S. government

(b) Bonds issued by corporations

(c) Postimpressionist paintings

(d) British pounds

Q5. Describe how each of the following events affects stock and bond prices:

(a) The economy enters a recession

(b) A genius invents a new technology that makes factories more productive

(c) The federal reserve raises its target for interest rates

(d) People learn that major news about the economy will be announced in a few days, but they don't know whether it is good news or bad news.