Define and explain gap analysis


Discussion:

1.state and explain any two advantage of a monetary economy

State and explain three functions of money

2.state and explain friedmans theory of inflation

State and explain fisherian theory of interest rate

.make use of the above to explain the relation of money supply growth rate and nominal interest rate

3. Define and indifference curve

.define an investment opportunity frontier

.define a consumption opportunity curve

Make use of the above and with a diagram to explain the importance of financial intermediation

4. Write short essay on the following four topics:

A.federal government budget constraint

B.pension funds versus 401K

C. Eurodollars

D.mark-to-market arrangement for future contract

5.State the two assumption of the unbiased expectation hypothesis

.define forward interest rate

.state the unbiased expectation hypothesis

. Make use of the above to explain why the yield curve can be downward sloping

6. Define efficient set

.define capital market line

.define an indifference curve

With a help of a diagram , make use of the above to determine the optimal portfolio and the price of risk

7.explain interest rate risk management problem of a commercial bank

.define and explain gap analysis

.state and explain any two methods to remove interest rate risk

8.write short essay on the following four topics

A. Holding yield

B. Convertible bond

C.securities and exchange commission

D.purchase and assumption method of FDIC

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Microeconomics: Define and explain gap analysis
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