Faculty of Management & Administrative Sciences University of Gujrat Money & Banking (MGT-304)

Answer the following questions. a) The United States Treasury borrows money on behalf of the federal government all the time. One type of government borrowing, called a treasury bill, promises a fixed payment at some number of months in future. The Treasury receives less for a promise to make a payment of $100 in six months than it dose for a promise to make a payment of $100 in three months. Why? Explain how this arrangement illustrates the core principle that time has value. b) Describe the five core principles of money and banking. c) Most investment advisers tell their clients to purchase shares in one or more mutual funds rather than to buy individual stocks. They argue that this practice reduces risk. Explain why? d) Small businesses tend to borrow money from banks. Would you lend directly to a small business? Relate your answer to the core principle of money and banking. e) Financial innovation has reduced individuals to carry cash. Explain how? f) Why is it important that financial markets offer individuals the ability to buy and sell financial instrument quickly and cheaply? g) Merchants that accept visa or MasterCard pay the issuer of the card a percentage of the transaction. For example, for each $100 charged on visa cards, a merchant might receive only $98. Explain both why visa charges the fee and why the merchant pays it. h) The government is heavily involved in the financial system. Explain why. i) List the six types of financial institutions and describe a transaction you might have that involve each one. j) What must be the characteristics of a purely electronic substitute for cash if most people are to stop using currency? Guidelines for assignment

Assignment#01

y Due on November 25th , 2011

y y y y y You will write 1,500 words ( 5%) for assignment. Font & Spacing: Your report should be printed in Arial 12pt, 1.5 line spacing and bound. Header/footer: Header must contain the name of topic while footer must contain the name of department at most right side as FMAS. Title page: title page should include all necessary requirements. Assignments should be printed on A-4 size paper

Faculty of Management & Administrative Sciences University of Gujrat Money & Banking (MGT-304)
Solve the following questions. 1. If you wish to accumulate $140,000 in 13 years, how much must you deposit today in an account that pays an annual interest rate of 14%? 2. What will $247,000 grow to be in 9 years if it is invested today in an account with an annual interest rate of 11%? 3. How many years will it take for $136,000 to grow to be $468,000 if it is invested in an account with an annual interest rate of 8%? 4. At what annual interest rate must $137,000 be invested so that it will grow to be $475,000 in 14 years? 5. If you wish to accumulate $197,000 in 5 years, how much must you deposit today in an account that pays. 6. If you deposit $16,000 per year for 12 years (each deposit is made at the end of each year) in an account that pays an annual interest rate of 14%, what will your account be worth at the end of 12 years? 7. You plan to borrow $389,000 now and repay it in 25 equal annual installments (payments will be made at the end of each year). If the annual interest rate is 14%, how much will your annual payments be? 8. You are offered an annuity that will pay $17,000 per year for 7 years (the first payment will be made today). If you feel that the appropriate discount rate is 11%, what is the annuity worth to you today? 9. You plan to accumulate $450,000 over a period of 12 years by making equal annual deposits in an account that pays an annual interest rate of 9% (assume all payments will occur at the beginning of each year). What amount must you deposit each year to reach your goal? 10. Global Mills Corporation is selling a new issue of bonds to raise money. The bonds will pay a coupon rate of 10% and will mature in 6 years. The face value of the bonds is $1,000; interest is paid semi-annually.The market rate of interest is currently 8% for similar bonds. a) What is the fair price for an investor to pay for one of these bonds? b) If you pay the current price of $1,100 for a bond, what will be your yieldto-maturity? 11. You have a chance to buy a BB-rated bond that has a face value of $1,000. The bond has a 5% coupon rate of interest and matures in four years. Interest is paid semi-annually. The market rate of interest is currently 6% per year for similar bonds. a) How much should you be willing to pay for the bonds? b) If you pay the current price of $950 for a bond, what will be your yield-tomaturity?

Assignment#01

12. The $1,000 face value ABC bond has a coupon rate of 6%, with interest paid semiannually, and matures in 5 years. If the bond is priced to yield 8%, what is the bond's value today? 13. The $1,000 face value EFG bond has a coupon of 10% (paid semi-annually), matures in 4 years, and has current price of $1,140. What is the EFG bond's yield to maturity? 14. The HIJ bond has a current price of $800, a maturity value of $1,000, and matures in 5 years. If interest is paid semi-annually and the bond is priced to yield 8%, what is the bond's annual coupon rate? 15. .The KLM bond has a 8% coupon rate,with interest paid semi-annually, a maturity value of $1,000, and matures in 5 years. If the bond is priced to yield 6%, what is the bond's current price? 16. The NOP bond has an 8% coupon rate (semi-annual interest), a maturity value of $1,000, matures in 5 years, and a current price of $1,200. What is the NOP's yieldto-maturity?

Guidelines for assignment

y Due on December 1st , 2011

y y y y Font & Spacing: Your report should be printed in Arial 12pt, 1.5 line spacing and bound. Header/footer: Header must contain the name of topic while footer must contain the name of department at most right side as FMAS. Title page: title page should include all necessary requirements. Assignments should be printed on A-4 size paper

Faculty of Management & Administrative Sciences University of Gujrat Money & Banking (MGT-304)
1. OPENING ACCOUNTS IN BANKS y y y y y Detailed Process of Account Opening Requirements for Account Opening Instructions for Account Opening Account Opening Form (Different Sections detail) Example of Any One Public Sector Bank

Assignment #03

Guidelines for assignment

y Due on January 10th , 2012

y y y y y You will write 1,500 words ( 5%) for assignment. Font & Spacing: Your report should be printed in Arial 12pt, 1.5 line spacing and bound. Header/footer: Header must contain the name of topic while footer must contain name of department at most right side as FMAS. Title page: title page should include all necessary requirements. Assignments should be printed on A-4 size paper

Faculty of Management & Administrative Sciences University of Gujrat Money & Banking (MGT-304) Assignment #04

2. REMITTANCE y Definition of Remittance y Process of Remittance y Parties in the Remittance y National Remittance and International Remittance y Remittance and Know Your Customer (KYC) y State Bank of Pakistan Rules and Regulations related to remittance Guidelines for assignment

y Due on January 31st , 2012

y y y You will write 2,500 words ( 5%) for assignment. Font & Spacing: Your report should be printed in Arial 12pt, 1.5 line spacing and bound. Header/footer: Header must contain the name of topic while footer must contain the name of student at most left side along with his/her role number and name of department at most right side as FMAS. Title page: title page should include all necessary requirements. Assignments should be printed on A-4 size paper

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