Examine the importance of each of the following Libor related
interest rates:
i) US Dollar LIBOR interest rate
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ii) British pound sterling LIBOR interest rate
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iii) Japanese yen LIBOR interest rate
iv) Tokyo Overnight Average Rate (TONAR)
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v) If you borrow N$1000 from a bank for 120 days and the
interest rate is 6 %, what is the effective interest rate?
vi) Mention the four (4) types of interest rate risk facing
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Namibian banks.
vii) In many countries, treasury bills are sold by single price
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auctions held weekly. Treasury bills are quoted for purchase
and sale in the secondary market on an annualized discount
percentage, or basis.
State the general calculation for yield on a discount basis
for treasury bills.
viii) Suppose a client bought a 91-day Certificate of Deposit
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(CD) with a coupon of 12 per cent, which has 45 days to
maturity. The CD has an identical yield of 12 per cent at
both purchase and sale. If the CD is sold 25 days later,
calculate the holding period return.
ix) Describe any four (4) money market instruments prevalent
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in the Namibian financial system.
x) What is meant by structural liquidity risk?
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xi) What is meant by contingent liquidity risk?
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