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Kingdom of Saudi Arabia

Ministry of Education

Saudi Electronic University

المملكة العربية السعودية

وزارة التعليم

الجامعة السعودية الإلكترونية

College of Administrative and Financial Sciences

Assignment 2

FIN401 (1st Term 2021-2022)

Deadline: 19/11/2021 @ 23:59

Course Name: Banks Management

Student’s Name:

Course Code: FIN401

Student’s ID Number:

Semester: I

CRN:

Academic Year: 1442/1443 H, 1st Term

For Instructor’s Use only

Instructor’s Name: Dr Firoz Alam

Students’ Grade: / 5

Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY

· This assignment is an individual assignment.

· The Assignment must be submitted only in WORD format via allocated folder.

· Assignments submitted through email will not be accepted.

· Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.

· Students must mention question number clearly in their answer.

· Late submission will NOT be accepted.

· Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.

· All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).

Submissions without this cover page will NOT be accepted.



Q.1: If a government bond is expected to mature in two years and has a current price of $950, what is the bond’s YTM if it has a par value of $1,000 and a promised coupon rate of 10 percent? Suppose this bond is sold one year after purchase for a price of $970. What would this investor’s holding period yield be? [1.5 Marks]

Q2. A 20-year U.S. Treasury bond with a par value of $1,000 is currently selling for $1,025 from various securities dealers. The bond carries a 6 percent coupon rate with payments made annually. If purchased today and held to maturity, what is its expected yield to maturity? [1.5 Marks]

Q 3. How can the discipline of the marketplace be used as a guide for making liquidity management decisions? Explain. [2 Marks- 500 words minimum]


Answer: