Answer all the six questions described below:
Q1. Illustrate the factors which are responsible for the Global Financial Crisis? Explain three factors in detail.
Q2. Explain the two consequences of the Global Financial Crisis in detail.
Q3. In brief explain how the Global Financial Crisis influenced the banking sector in the US and Australia.
Q4. The Commonwealth Bank issues bonds on capital market to increase financing for its loans.
a) Illustrate how much financing will the Commonwealth Bank increase if it issues 500, 5-year bonds that pay an annual coupon of 6% and contain a face value of $1000 if yields on bonds of similar risk and maturity are 7%?
b) What will happen to the price of bonds in (a) if in 1 year the credit rating of the Commonwealth Bank is raised from AA to AAA? Explain why?
Q5. Apple Inc. (APPL share code) issues bank bills on the money market to increase the short-term financing for its operations.
a) Explain how much financing Apple would raise if it issued a bank bill which consists of a maturity of 180 days, a face value of $50 million and was issued at a rate of 5%? The acceptance fee is 50 basis points.
b) Do you think Apple Inc. must have issued a commercial paper instead of bank bill? Describe why or why not.
Q6. The ANZ Bank (Share code: ANZ.AX) expects to pay a dividend of $0.91 today and dividends are expected to grow at 6% forever. Required return on Commonwealth Bank shares is 9%. Based on information would you buy the share today?