College of Business Administration

Department of Finance and Economics

Fall 2017/2018, Money & Banking
Assignment NO (1), total Marks =7
Dr. Atif Awad
Instructions
First page should include (1) the title of the course (2) assignment No, and (3)
your name & your ID
Deadline for submission is between 15-18/10/2017 in the class room.
Only submission of typed & printed (hard copy) will be considered
Rules To Be Adhered To
Proper Referencing and Plagiarism: All submitted projects are expected to be
properly referenced. Plagiarised assignments will be penalised. Plagiarism is the
copying of another persons ideas or expressions without appropriate
acknowledgment and presenting these ideas or forms of expression as your own.
Plagiarism includes copying any material from books, journals study notes or
tapes, the web, the work of other students, or any other source without indicating
this by quotation marks or by indentation, italics or spacing and without
acknowledging that source by footnote or citation. Plagiarism also includes the use
of the work of other students as your own without acknowledgment. The College
and University regard plagiarism as an

The Questions
1-When the dollar is worth more in relation to currencies of other countries, are
you more likely to buy American-made or foreign-made jeans? Are U.S.
companies that manufacture jeans happier when the dollar is strong or when it
is weak? What about an American company that is in the business of importing
jeans into the United States? (2 marks)

2-One of the factors contributing to the financial crisis of 20072009 was the
widespread issuance of subprime mortgages. How does this demonstrate
adverse selection? (1.5 marks )
3-Why might you be willing to make a loan to your neighbor by putting funds in
a savings account earning a 5% interest rate at the bank and having the bank lend
her the funds at a 10% interest rate, rather than lend her the funds yourself? (1.5
marks )
4-Why would a government choose to issue a perpetuity, which requires
payments forever, instead of a terminal loan, such as a fixed-payment loan,
discount bond, or coupon bond? (2 marks)
Good Luck