1-React to this statement: For companies which are depository, the balance sheet drives the income statement, while for most other types of companies (e.g., Apple, GM, GE) the income statement drives the balance sheet.
2- React to the following statement: Convexity imposes limits on the usefulness of immunization as an asset-liability management tool.
3-Identify and describe at least four important risks faced by financial intermediaries.
4-React to the following statement: “The avoidance of financial risk is the path to success as a financial intermediary”
5-Set up the calculation to solve for the present value of a debt instrument with a 7-year maturity, a face amount of $1000, and an annual coupon of 9% at a 7% required yield. Would this bond trade at par, a premium or a discount?