Financial Markets and Institutions questions

Respond to the following five questions. Write your responses in a Word document, and number them 1–5.

  1. Categorize each of the following transactions as taking place in either the primary or secondary market:
    • Supercorp issues $180 million of new common stock.
    • HiTech, Inc. issues $30 million of common stock in an IPO.
    • Megaorg sells $10 million of HiTech preferred stock from its marketable securities portfolio.
    • The XYA Fund buys $220 million of previously issued Supercorp bonds.
    • A. B. Corporation sells $15 million of XYZ common stock.
  2. Identify whether the following financial instruments are capital market securities or money market securities:
    • U.S. Treasury bills.
    • U.S. Treasury notes.
    • U.S. Treasury bonds.
    • Mortgages.
    • Federal funds.
    • Negotiable certificates of deposit.
    • Common stock.
    • State and government bonds.
    • Corporate bonds.
  3. Identify the different types of financial institutions. What are the main services each of these financial institutions offers?
  4. Define the six factors that determine the nominal interest rate on a security.
  5. Define the concept of term structure of interest rates. What are three theories that explain the future yield curve of interest rates?

Use references to support your answers as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.

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Financial Markets and Institutions Scoring Guide

CRITERIA NON-PERFORMANCE BASIC PROFICIENT DISTINGUISHED
Categorize financial transactions as taking place in the primary or secondary market. Does not categorize financial transactions as taking place in the primary or secondary market. Incorrectly categorizes financial transactions as taking place in the primary or secondary market. Categorizes financial transactions as taking place in the primary or secondary market. Categorizes financial transactions as taking place in the primary or secondary market and connects categorization to relevant real-world examples.
Identify financial instruments as money market securities or capital market securities. Does not identify financial instruments as money market securities or capital market securities. Incorrectly identifies financial instruments as money market securities or capital market securities. Identifies financial instruments as money market securities or capital market securities. Identifies financial instruments as money market securities or capital market securities and connects identification to relevant real-world examples.
Describe services offered by each type of financial institution. Does not describe services offered by a variety of financial institutions. Describes services offered by a variety of financial institutions but omits key elements. Describes services offered by each type of financial institution. Describes services offered by each type of financial institution and connects these services to relevant, real-world examples.
Define factors that determine the nominal interest rate on a financial security. Does not define factors that determine the nominal interest rate on a financial security. Defines factors that determine the nominal interest rate on a financial security but omits key elements. Defines factors that determine the nominal interest rate on a financial security. Defines factors that determine the nominal interest rate on a financial security and connects the definition to relevant real-world examples.
Define the concept of terms structure of interest rates. Does not define the concept of terms structure of interest rates. Defines the concept of terms structure of interest rates but omits key elements of the definition. Define the concept of terms structure of interest rates. Defines the concept of terms structure of interest rates and describes the theories that explain the future yield curve of interest rates.

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