Question (4 points)Describe the difference between bullish and bearish views. Describe the steps in...

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Assume the first tuition payment is due in exactly 18 years from today and the expected return is 10% over this period.(i) Calculate the bi-annual deposit.(ii) You only plan on making 3 deposits – the first on your child’s 5th birthday, second on their 11th birthday and third on 15th birthday. Each deposit will be double the previous deposit. Calculate each deposit.Question  (5 points)Describe the basic principles of credit analysis. How does credit analysis differ for municipal issuers?How does credits analysis differ for sovereign issuers?How does credits analysis differ for ABS issuers? This answer can be ief since we have not discussed securitization in detail. Discuss the basics of Altman’s Z-score. Question  (5 points)Explain the differences between the following yield curves:a.  On-the-run yield curve. Off-the-run yield curvec. On and off-the-run yield curve. d. Treasury strip yield curve.e. Swap (LIBOR) yield curve. 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Neenisha · Accepted Answer

Question 1
Bullish Views
Bullish views mean that investors believe that the market will go up. This means that the prices of the stocks will go up. This implies that there is an upward trend in the market.
Bearish Views
Bearish views mean that the investors believe that the market will go down and thus, the prices are expected to fall. This means that the downward trend is predicted in the market.
Steps involved in short selling
Short selling is undertaken by investors when there is a bearish view in the market.
· First the investor needs to borrow the shares from the broker.
· Then the investor sells those shares at the market price immediately.
· Now, when the stock price of the share goes down, investor buys the shares at a lower price.
· Then, he delivers the shares to the broker and earn the margin due to difference in the stock price at the time of selling and buying.
Question 2
Quote Driven Market
This market displays the quotes in form of bid and asks only of the market makers. Therefore, transparency lacks in this market and an individual investor does not views all the quotes.
Order Driven Market
In In this kind of market, all the orders related to the bid and asks of the individuals is displayed. It displays the amount of the stock also. If an order is placed then it is shown. Hence, this kind of market displays the bid and asks of everyone.
Call Market 
Call markets are the markets where trading takes place in certain time periods. These time intervals are known as trading sessions. 
Continuous Market
In Continuous market, the trading takes place any time when the market is open. This means that the trading can take place between the market timings.
Question 3
	First Year
	Second Year
	Third Year
	Fourth Year
	50000
	50000
	50000
	50000
Expected Return = 10%
NPV = 
NPV of the Tuition Fees = $ 158,493
(a)
Bimonthly Payment Required can be computed using Excel Function PMT(rate, no of payments, Present value)
In our case,
Rate = 10%
No of Payments = 36
Present Value = $ 158,493
Bimonthly Payment = $ 16,379
(b)
	0
	1
	2
	3
	4
	5
	6
	7
	8
	9
	10
	11
	12
	13
	14
	15
	16
	17
	18
	
	
	
	
	
	x
	
	
	
	
	
	2x
	
	
	
	4x
	
	
	
We know, 
x*(1 + rate)13 + x*(1 + rate)7 + x*(1 + rate)3
Payment on 5th Birthday = $ 43,173
Payment on 11th Birthday = $ 48,740
Payment on 15th Birthday = $ 66,580
Question 4
Basic Principals of Credit Analysis
1. Character – Managerial Ability
2. Capacity – Ability to generate cash flows
3. Collateral – Quality of assets of company
4. Covenants – Ensuring the payment on debt
How Credit analysis differ between municipal issuers and corporate issuers
Municipal issuers are the issuers giving credit to government or its entities.
Corporate issuers credit analysis is analyzing the credit worthiness of the corporates to generate cash flows.
How credits analysis differs between corporate issuers and sovereign issuers
Credit analysis for corporate issuers is understanding their ability to generate cash flows while for sovereign issuers it is to understand the willingness to pay and issuers ability.
How credits analysis differs between municipal issuers and sovereign issuers
Credit analysis for municipal issuers is analyzing the credit risks of the municipal bonds and for sovereign issuers it is to understand the willingness to pay and issuers ability.
How credits analysis differs for ABS issuers
Asset backed securities are issued by the special purpose entity. The purpose is to remove the asset or to gain profits. Therefore, assets are being analyzed.
Altman’s Z-score
It is a score computed by using several ratios to assess whether the firm can be bankrupted or not. It is used to measure the bankruptcy analysis of any company. A score close to 1.8 means that the company may head to bankruptcy.
Question 5
On-the-run yield curve
Curve based on-the run treasuries of US. The bonds of similar type are plotted against their maturities. They have lower yield.

Question (4 points) Describe the difference between bullish and bearish views. Describe the steps in a short sale. Question (4 points) What are the differences between quote driven and order driven...

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