Banking Commission Essays - Systemic Risk, , Term Papers

Banking Commission "More than 70% of commercial bank assets are held by organizations that are supervised by at least two federal agencies; almost half attract the attention of three or four. Banks devote on average about 14% of their non-interest expense to complying with rules" (Anonymous 88). A fool can see that government waste has struck again. This tangled mess of regulation, among other things, increases costs and diffuses accountability for policy actions gone awry. The most effective remedy to correct this problem would be to consolidate most of the supervisory responsibilities of the regulatory agencies into one agency. This would reduce costs to both the government and the banks, and would allow the parts of the agencies not consolidated to concentrate on their primary tasks. One such plan was introduced by Treasury Secretary Lloyd Bentsen in March of 1994. The plan called for folding, into a new independent federal agency (called the Banking Commission), the regulatory portions of the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS). This plan would save the government $150 to $200 million a year. This would also allow the FDIC to concentrate on deposit insurance and the Fed to concentrate on monetary policy (Anonymous 88). Of course this is Washington, not The Land of Oz, so everyone can't be satisfied with this plan. Fed Chairman Alan Greenspan and FDIC Chairman Ricki R. Tigert have been vocal opponents of the plan. Greenspan has four major complaints about the plan. First, divorced from the banks, the Fed would find it harder to forestall and deal with financial crises. Second, monetary policy would suffer because the Fed would have less access to review the banks. Thirdly, a supervisor with no macroeconomic concerns might be too inclined to discourage banks from taking risks, slowing the economy down. Lastly, creating a single regulator would do away with important checks and balances, in the process damaging state bank regulation (Anonymous 88). To answer these criticisms it is necessary to make clear what the Fed's job is. The Fed has three main responsibilities: to ensure financial stability, to implement monetary policy, and to oversee a smoothly functioning payments system (delivering checks and transferring funds) (Syron 3). The responsibilities of the Fed are linked to the banking system. For the Fed to carry out its job it must have detailed knowledge of the working of banks and financial markets. Central banks know from the experience of financial crises that regulatory and monetary policy directly influence each other. For example, a banking crises can disturb monetary policy, discouraging lending and destroying consumer confidence, they can also disrupt the ability to make or receive payments by check or to transfer funds. It is for these reasons that it is argued that the Fed must maintain a regulatory role with banks. The Treasury plan would leave the Fed some access to the review of banks. The Fed, which lends through its discount window and operates an interbank money transfer system, would have full access to bank examination data. Because regulatory policy affects monetary policy and systemic risk, it is necessary that the Fed have at least some jurisdiction. The Fed must be able to effectively deal with current policy concerns. The Banking Commission would be mainly concerned with the safety and stability of the banks. This would encourage conservative regulations, and could inhibit economic growth. The Fed clearly has a hands on knowledge of the banking system. "The common indicators of monetary policy - the monetary aggregates, the federal funds rate, and the growth of loans - are all influenced by bank behavior and bank regulation. Understanding changes and taking action in a timely fashion can be achieved only by maintaining contact with examiners who are directly monitoring banks" (Syron 7). The banking system is what ultimately determines monetary policy. It is only common sense to have personnel in the Fed that have a better understanding of the system other than just through financial statements and examination reports. The Fed also needs the authority to change bank behavior that is inconsistent with its established monetary policy and with financial stability. This requires both the responsibility for writing the regulations and the responsibility for enforcing those regulations through bank supervision. State banking charters have already started to be affected. Under the proposed plan, state chartered banks would be subject to two regulators. While the federal bank would have only one. Thus, making the state bank charter less attractive. However, an increasing number

The Relationship of the American TV Family versus the real life essays

The Relationship of the American TV Family versus the real life essays The Comparison of the TV family to the everyday real life family can take many avenues to explore, but I'll try to keep it as basic as possible. First I'll break down the animated TV family "The Simpsons", and then I'll break down a real life middle class family that I know all to well. I. The Simpsons; Father, Mother and three children. The various daily problems they encounter in their middle class suburban lives. a) The Father. Hopeless fool. Everything he attempts turns into total chaos, from his job, home life, to hanging out with his buds. b) The Mother. Hard working sensible women trying her hardest to maintain some form of sanity in her insane world. c) The children. The broad spectrum from the rowdy to the innocent. II. The real life middle class family Father, Mother, and three children. The somewhat different, but similar problems they encounter in their real middle class suburban lives. a) The Father. Typical father figure trying to juggle a million things at once. b) The Mother. Homemaker and confidant', going in every which direction to fulfill everyone's needs. c) The children. Intelligent know it all's. "Been there done that " attitude. To summarize the we look at the comparison of the American Family portrayed on TV and the real life family living in the in the suburbs. Now we must wonder if our friends and neighbors see our families as "The Simpsons" or as well-adjusted functional members of society. The Comparison of the TV family to the everyday real life family can take many avenues to explore, but I'll try to keep it as basic as possible. First I'll break down the animated TV family "The Simpsons", and then I'll break down a real life middle class family that we might know all to well. The Simpsons: a family that consists of a father, mother and three children. The various daily problems they encounter in their middle class suburban lives. Makes you wonder ...

Describe your personal, professonal, and academic experience that you Essay

Describe your personal, professonal, and academic experience that you desmontrate why would be a good indicate for business job - Essay Example That was when I made my life-changing decision to leave everything I knew behind me and set off for the city, where education could be had by anyone willing to put in the effort. Through moving, I have learned various ways in which my personal, professional and academic life can help me in a business setting. When I moved from my home, I didn’t know anyone and had no one to depend on but myself. I went to the hotel where I had reserved a room for a week and then went to the church. I’m not entirely sure why I did this, but I think I had some idea in my head that the church would help me find my way as it had always done back home. However, I discovered that city churches have far too many members to be concerned about one lonely young person walking in their midst. There was no one there ready and happy to take on what they saw as a ‘free-loading’ college student no matter how much I insisted that I intended to contribute. My next stop was the college, where I learned what I would need to do to gain entrance to the classes I would need. The lady in the financial aid office was very kind and gave me a sort of blueprint to follow regarding how to get started in my new life. She helped me find a home with a room to lease and showed me how to look for jobs. From th e business sense I had gained organizing the kids back home, I quickly learned how to earn money, pay my own way and fend for myself in the concrete jungle. Part of learning to fend for myself depended on another new skill I developed which was making friends or networking. Making friends in a new place wasn’t the same as making friends in a place where everyone knows everyone else. Like getting settled, I wasn’t really sure how to go about doing this in my new home. Where I came from, you usually waited for an introduction to someone new from someone you’ve known before you can start talking to strangers. I didn’t know

Strategic managment Essay Example | Topics and Well Written Essays - 4000 words

Strategic managment - Essay Example The similarities and the differences of both cases can be understood only if referring to key elements of these strategies but also to their background – i.e. the needs that led to the design and the implementation of these strategies and which were the expectations of their initiators; the success of these efforts would be also another issue for consideration especially when evaluating the tools and the analyses used for the development of the particular projects. In Uganda, the DISH project was actively supported by the country’s Ministry of Health. The project focused primarily on the prevention of expansion of HIV and TFRs – also of STD – among the population; a wide range of communication campaigns were developed across the country for a period of 8 years. The project was implemented gradually – i.e. in two phases. Its first phase began in 1994 and lasted for 5 years (see case study). The second phase began in 1999 and lasted for 3 years. In other words, the project was completed on 2002. The communication with the public – through appropriately designed communication campaigns – was the main strategic tool of the specific project. Another detail related with the implementation of the DISH project is the fact that a detailed SWOT analysis was developed before the implementation of the project in the country. The needs of the local society but also the challenges related with the development of thi s project were therefore carefully addressed before the realization of the project’s various activities. Despite the fact that the specific project was initiated by the state (ministry of health) it was developed and monitored by a private organization – Pathfinder International; a series of organizations were participated in the various phases of the project (like the JHU/ CCP and the University of North Carolina). The project was funded by the United States (Agency for International Development). In

Gunshot Forensic Analysis

Gunshot Forensic Analysis School of Chemistry MM4EOX: Electron-optical and X-ray Techniques Pages 12: Forensic investigation: trace evidence analysis for gun-shot residue Page 3: Phase identification : characterization of nanostructured materials Page 4: Enviromental safety: characterization of fine scale particle distribution Forensic investigation: trace evidence analysis for gun-shot residue Introduction The ability to identify gunshot residue has provided solution to the problems encountered in the resolution of forensic science, legal medicines, and for shooting distance determination. Visually comparing the casework powder residue pattern on the garment or on the skin of the victim with the pattern obtained from a series of test firings at known distances, using the same gun and ammunition has been used as a method for routinely estimating gunshot range. Burned and unburned powder grains, carbonaceous particles, bullet jacket debris, shaving and dirt have been shown to be examples of materials ejected from the bore of the weapon around the entrance hole of the bullet and have been used as materials for analytical determination in order to obtain a more and accurate result.1 An issue that has become very important in criminal investigation is trace evidence. Very often it come into place after the commission of a crime, well after the charges have been filed and well after the completion of forensic examination. Trace evidence can usually take the form of fibers, paint chips, soil, building materials, glass, gunshot residue, seeds, feathers, animal hair, human hair, wood fragments and other material. It has been proved that these substances are usually transferred between individuals during physical contacts and can also be transferred from individuals to environments and from environment to individuals.2 This report shows how complementary analytical techniques ranging from batch injection analysis (BIA) method, based on differential pulse anodic stripping voltammetry (DPASV), scanning electron microscopy/ energy dispersive X-ray analysis (SEM/EDX), capillary electrophoresis, can been used to identify trace evidence for gun-shot residue. Batch Injection Analysis Batch injection analysis (BIA) method, based on differential pulse anodic stripping voltammetry (DPASV) can been use to carry out forensic analysis of lead in gunshot residues (GSR). The design consist of a simple â€Å"J† shaped adaptor which is being used to direct the flux of the analyte injected with a micropipettor onto the hanging mercury drop electrode of any commercial electrode stand. Lifting with adhesive tape is usually selected for field use and pasting of the tape is done on polyethylene screens and stored in capped vials. Sampling is usually done with multiple strips and thus provides coarse mapping of the distribution of the Lead on the shooters hand following the dissolution/extraction step with chloroform/aqueous HCl. Certain volume of this aqueous phase is then injected for few seconds for accumulation of the Lead on the HMDE at a certain volt (vs. Ag/AgCl). A detection limit of 20 ng/mL of Pb(II), outreaching for GSR analysis can be achieved without oxygen r emoval, at a frequency of 20 injections per hour. Quantitative analysis has shown the detection of over 90% of lead residues.3 Scanning electron microscopy/ energy dispersive X-ray analysis Elemental analysis using SEM/EDX can be carried out in order to understand bullet structure and major elemental composition. Datas produced from elemental composition of bullets can be used in deciding the exact methods most appropriate for the identification of bullet hole and the determination of firing distance. Bullets and shots are usually collected from unfired cartridges and subsequently brushed with detergents and cleaned using tap water, distilled water, and acetone. Double-sided carbon tape can be used as a means of mounting jackets, lead cores and lead bullets and shot onto the sample stub on subjection to SEM/EDX analysis. The external surface, cross section of lead core, lead bullet, or lead shot can be subjected to elemental analysis using EDX. The internal surface and cross section of the jacket can also be subjected to elemental analysis in order to understand its structural composition. EDX measurement conditions can be set from the SEM unit with regards to spectral measurement, multi-point measurement, mapping, and display of analysed elements on the SEM monitor. The image data obtained from the SEM can be used as basic data for the EDX, while the setting conditions for the SEM units are automatically transferred to the EDX unit. The function which provides the strongest backup for elemental distribution is the Smart Map. The Smart Map operates by recording the X-ray spectral data for all analysis points on the test sample together with the positions of analysis, thus providing the user to recall valuable data as needed. Backscattered electron imaging mode in SEM is able to reveal layers of metals on the jackets cross-section and its subsequent compositions while on the other hand, EDX analysis is able to reveal the coating elements detected on the external surface of lead bullet.4-5 At the moment, this technique is widely accepted due to the morphological (SEM) and elemental (EDX) determination of the metal residue. Capillary electrophoresis Capillary electrophoresis can be used for the analysis of organic and inorganic components of gunshot residue in order to study sampling methodology, selectivity, reproducibility, quantification and the enhancement of the bulk analysis. A typical P/ACE MDQ Beckman capillary electrophoresis system is being used with polymide bare fused silica capillaries. A diode detector is usually used as a means of carrying out direct UV detection. A temperature of 25oC, with a positive voltage of 30KV and hydrodynamic injection of 5s and 0.5 p.s.i is usually used. The conditioning of new capillaries is usually done by rinsing with ethanol, HCL, NaOH at specific time and temperature. Between runs, the capillary is usually rinsed with deionised water, NaOH, and again with deionised water and background electrolyte at specific times. The sample is usually ejected into the capillary by temporal replacement of one of the buffer reservoir (usually at the anode) with a sample reservoir upon application o f either an electric potential or external pressure for a few seconds. Upon replacement of the buffer reservoir, an electric potential is applied between the capillary and the separation is performed. Optical UV-detection of the separated GSR component can be obtained directly through the capillary wall near the opposite end (usually near the cathode). Swabbing technique has been used as a means of obtaining samples from gunshot. This technique is however not too good in detecting important organic residue such as barium and antimony. Figure 1, shows a typical zone of sampling for gunshot residue.6-7 Figure1 Typical zones of sampling for gunshot residue. (A) web and (B) palm.7 Phase identification: characterization of nanostructured materials Complementary analytical techniques such as X-ray diffraction (XRD), electron microscopies such as TEM SEM, and EDX spectrometry can be employed as a set of tools in characterizing a one-dimensional inorganic nanostructure in order to investigate the crystal structure, particle size distribution, morphology, composition and aggregate state. XRD The technique of XRD can be used to deduce the lattice parameter of inorganic nanostructures which can be used to provide information on the thermal properties of the material, strain state or an analysis of the defect structure. The diffraction pattern of the material can be indexed appropriately if the crystal structure of the material is known. For example, in a cubic system, the d spacing which correspond to each diffraction pattern is related to the lattice parameter a following the equation a2 = d2 / (h2 + k2 + l2) in which hkl are the miller indices. This is however used in indexing the diffraction pattern. This technique is however subject to systematic error in the position of the diffraction peaks and random error in the individual calculation of the lattice materials.8 The calculated lattice parameter value is usually compared with the experimental value and this can further be used for appropriate interpretation of result. SEM/EDX Nanostructured materials can be characterized by SEM integrated with an EDX analyzer in order to determine the particle morphology and chemical composition of the sample. The SEM column forms a focused probe of electrons on the sample while the beam current and probe current are usually adjusted as required. An image is formed by scanning the probe in a raster pattern on the sample, detecting some excited radiations from the sample, and storing the result either as a pattern of varying intensity levels on a cathode ray tube (CRT) screen or an a pattern of digital values in electronic memory for later manipulation and display. SEM images are usually formed by detecting either the secondary (low-energy) electrons emitted from the sample, or the backscattered (high-energy) electrons.9 Secondary electron images can provide information on the sample topography thus revealing information about the grain size distribution of the material. TEM/EDX TEM/EDX investigation of nanostructured materials can provide a more detailed information about the smallest particle. When the selection area diffraction (SAD) pattern is projected onto the viewing screen, we can use this pattern to perform the two most basic imaging operations in the TEM. In order to form an image in TEM, we either use the central spot, or we use some or all of the scattered electrons. The way we choose which electron forms the image is to insert an aperture into the back focal plane of the objective lens, thus blocking out most of the diffraction pattern except that which is visible through the aperture. If the direct beam is selected the resultant image is a bright-field (BF) image and if the scattered electrons are selected then the resultant image is the dark-field (DF) image.10 The dark-field imaging and digitization of particles can be used to extract size distribution of the grains through thresholding and measurement of the projected areas. Enviromental safety: characterization of fine scale particle distributions Appraisal of the fine scale particle distributions emitted from a waste disposal furnace can be carried out using SEM/EDX to investigate the particle morphology, composition and chemistry, while TEM/EDX can be carried out to give a more detailed information about the particle size distribution and SIMS to determine isotopic ratios. SEM/EDX SEM equipped with an energy dispersive X-ray (EDX) spectrometer can be used determine the elemental composition, morphology and chemistry of emitted particle in a waste disposal furnace. In order to determine the emitted particle containing the heavy metals, the sample is subjected to backscattered electron imaging while emitted particle containing salts can be imaged in the secondary electron mode. The detected backscattered electrons originate from the larger volume of the sample than do secondary electrons, and thus form an image of lower resolution. Focusing of a small spot on the high Z area followed by analysis of the X-ray signal with EDX allows the resulting X-ray lines to be detected and the elemental composition determined. TEM/EDX TEM images of the sample which comprises DF and BF can be coupled with EDX analysis and chemical mapping can be carried out. Both DF and BF imaging in TEM can be used to investigate the metal speciation in the fine fraction of the emitted particle furnace. DF imaging and digitization of the particle can be used to extract size distribution through thresholding and measurement of project areas. Elemental composition of the emitted particle could be detected in small aggregates upon analysis by EDX and selected area electron diffraction. SIMS Secondary ion mass spectrometry (SIMS) can be used to determine isotopic ratios of the heavy metals from within emitted particles. It operates by switching between masses and it possesses two microfocus ion sources. Sputtering is usually done with a primary O2+ and the intensity controlled by tuning the primary ion beam. The instrument can operate with a mass resolution power (MRP) of 25000.11 REFERENCES [1] Roberto G, Anna P and Salvatore, J Forensic Sci, March 2008, Vol. 53, No. 2. [2] Douglas D, Crime Scene, United States Attorneys Bulletin, 2001Vol. 49 No. 5. [3] Adriana D, Ivano G and R. Gutz, Electroanalysis 2005, 17, No. 2. [4] Hsien-Hui M, and Yen-Lin C, Forensic Science Journal 2006 5:21-34. [5] Toshikazu Y, Sukehiro I, Yoshinori N, Keith S, Readout, 2001 No. 22. [6] Richard A, Jennifer M, Harry E, Background theory and principles of capillary electrophoresis. [7] Ernesto B, Alma L. Revilla V,J. Chromatography A, 1061 (2004) 225-233

Epic Characteristics of Paradise Lost Essay -- essays papers

Epic Characteristics of Paradise Lost Paradise Lost is one of the finest examples of epic tradition in all of literature. In composing this work, John Milton was, for the most part, following in the manner of epic poets of past centuries. By knowing the background of epic characteristics and conventions, it is easy to trace their presence in Book I of Paradise Lost. One of the biggest questions that a reader must face is that of the hero; exactly who is the epic hero in the poem? While Satan may not be the "hero" of Paradise Lost, Milton quickly establishes him as its main character, and as the most complex and detailed of Milton's descriptions. Satan is given many traditional attributes as an epic hero. Although he may not be the classical hero, he does defeat the creatures that God had created. This is why I feel that Milton meant Satan to be the hero of Paradise Lost. Another three characteristics of the epic are hardly items of debate, as was the hero. The setting of the poem is indeed vast in scope. It ranged from Heaven to Hell and to the Earth. The action of the story also consisted of deeds of great valor that required superhuman courage. Although biblically, we may not consider Satan to have courage, we know that he must have shown it while fighting the war in heaven against God. According to the dictionary, courage is "that quality of mind which shows itself in facing danger without fear or shrinking." Satan most certainly may be said to fit this description. There were also supernatural forces at work throughout the poem, such as gods, angels, and demons. In addition to these four epic characteristics, Milton also employees the so-called epic conventions in his poem. Milton definitely begins b... ...the hive†¦" (lines768+). These similes are Milton's way of helping us to better relate the story to common things in our lives. In spite of some alterations and modifications, we can clearly see how Milton used the classical epic characteristics and conventions in his writing. It was by employing these methods in to an already well known story that Milton created a masterpiece. Francis C. Blessington seems to sum it up the best. "Milton built his epic out of those of Homer and Virgil, like a cathedral erected out of the ruins of pagan temples whose remains can still me seen" (xiii). Bibliography: Works Cited Blessington, Francis C. Paradise Lost and the Classical Epic. Boston: Routledge, 1979. Milton, John. "Paradise Lost." The Norton Anthology of English Literature. Ed. M. H. Adams. New York: W. W. Norton & Company, 1993. 1475-1495.

They Are More Complex Than You Think

Case Corporate Bonds – They are More Complex Than You Think 1. How should Jill go about explaining the relationship between coupon rates and bond prices? Why do the coupon rates for the various bonds vary so much? Jill should explain the relationship between coupon rates and bond prices by calculating the price of the bonds, which have similar features except coupon rate. Let’s compare ABC Energy issuer with the coupon rate 5% and 0% (the same with rating and YTM) IssuerMaturityFace ValueCoupon RateRatingYieldPrice% Change ABC Energy2010005%AAA2%$1,490. 54 49. 05% ABC Energy2010005%AAA3%$1,297. 55 29. 5% ABC Energy2010005%AAA5%$1,000. 00 0. 00% ABC Energy2010005%AAA6%$885. 30 -11. 47% ABC Energy2010000%AAA2%$672. 97 -32. 70% ABC Energy2010000%AAA3%$553. 68 -44. 63% ABC Energy2010000%AAA5%$376. 89 -62. 31% ABC Energy2010000%AAA6%$311. 80 -68. 82% The table shows that the 5% coupon bond has a wider fluctuation in price than the zero coupon bond for equivalent changes in y ield. 2. How are the ratings of these bonds determined? What happens when the bond ratings get adjusted downwards? The ratings of these bonds are determined by two professional bond-rating firms: Moody’s and Standard & Poor’s (S&P).Each of these bond-rating firms has a committee that evaluates the risk level of the company’s bond issue. It assigns a rating ranging from AAA or Aaa (best rating) down to D (default). The ratings are periodically re-evaluated whenever there is a significant development in a company’s structure or earning performance. When the ratings get adjusted downward, the bond becomes less attractive. Hence, the rate of return goes up to reduce its price. 3. During the presentation one of the clients is puzzled why some bonds sell for less than their face value while others sell for premium.She asks whether the discount bonds are a bargain. How should Jill respond? Bonds can be issued at a discount, at par, or even at premium from face v alue. The majority of bonds are sold at par ($1,000) with the coupon rate being set equal to the yield that proportional with its rating and maturity. After it is being issued, the yields demanded by investors will change, but the coupon rate still stays the same. If the yield exceeds the coupon rate, investors are demanding a higher rate of return than what the company is currently paying via the coupon payment, which leads the price drops and vice versa.As long as the yields are a true reflection of the risk level of the bond, there would not be any a bargain for the bond price, whether at a discount or premium from face value. 4. What does the term â€Å"yield to maturity† mean and how is it to be calculated? The â€Å"yield to maturity† (YTM) of a bond is the rate of return that an investor expects to earn when he or she buys the bond at its current price, receive the face value when it matures. The YTM is considered a long-term bond yield expressed as an annual ra te. The YTM of a bond is also known as its promised yield.To calculate a bond’s YTM, we must use the following inputs: For example: ABC Energy, 5%, 20 years, face value $1,000, price $703. 1 (semi-annual coupons) PV= -703. 1, N=40, PMT = 25, FV = 1000 => I = 4 (semi-annual) Interest annual = 4%*2 = 8 % 5. What is the difference between the â€Å"nominal† and effective yields to maturity for each bond listed in Table 1? Which one should the investor use when deciding between corporate bonds and other securities of similar risk? Please explain. IssuerFace ValueCoupon Rate Rating Quote PriceYTM Sinking FundCall Period YTM (semi-annual)Nominal YTMEffective YTM ABC Energy 10005%AAA703. 20yes34. 0001%8. 0001%8. 1601% ABC Energy 10000%AAA208. 320yesn/a3. 9999%7. 9997%8. 1597% TransPower100010%AA109220yes54. 5000%9. 0001%9. 2026% Telco Utilities100011%AA1206. 430no54. 4999%8. 9998%9. 2023% The nominal yield to maturity on the bond is calculated by multiplying the semi-annual y ield by two. The effective YTM is calculated by compounding the semi-annual yield for two periods. For example, on the ABC Energy 5%, 20 year bond, the semi-annual YTM is 4%. The effective annual YTM would be calculated [(1+0. 4)^2]-1 = 0. 0816 or 8. 16%.Since the YTM is a promise yield with the actual yield being dependent on the reinvestment rate that each investor is able to earn, it is best to compare similar risk bonds on the basis of their nominal YTMs. 6. Jill knows that the call period and its implications will be of particular concern to the audience. How should she go about explaining the effects of the call provision on bond risk and return potential. Call provisions are attached to bonds so that it allows companies to refinance their debt at lower rates when interest rates drop.The existence of a call provision presents a risk to the bond investor that their investment horizon on that bond may be prematurely ended. Moreover, there is reinvestment risk associated with cal lable bonds, since the bonds are called when rates are low. The company does pay a premium when the bond is called. Furthermore, there is a deferred call period for five years, which the bond can’t be called. In the case of callable bonds, investors should calculate the yield to the first call of the bonds to decide.For this calculate, the future value is set to equal to $1,000 + 1 year coupon, the maturity is assumed to be the number of years until the bond become callable. 7. How should Jill go about explaining the riskiness of each bond? Rank the bonds in terms of their relative riskiness. IssuerFace ValueCoupon Rate Rating Quote PriceYTM Sinking FundCall Period YTM (semi-annual)Nominal YTMEffective YTMRisk Rank (1=low) ABC Energy 10005%AAA703. 120yes34. 0001%8. 0001%8. 1601%1 ABC Energy 10000%AAA208. 320yesn/a3. 9999%7. 9997%8. 1597%2 TransPower100010%AA109220yes54. 5000%9. 001%9. 2026%3 Telco Utilities100011%AA120630no54. 4999%8. 9998%9. 2023%4 The bond ratings provide a general guide as to the credit risk associated with each bond. Within it ratings, investors need to be aware of call risk, reinvestment risk, maturity, and the sinking fund provision’s effect on risk. Callability makes a bond have a higher reinvestment risk. Among the AAA bonds, the zero coupon bond has no call risk, no reinvestment risk, but the higher price risk. Among the AA bonds, Telco Utilities has a longer maturity and no sinking fund making it the riskiest. . One of Jill’s best clients poses the following questions, â€Å"If I buy 10 of each of these bonds, reinvest any coupons received at the rate of these bonds, reinvest any coupons received at the rate of 5% per year and hold them until they mature, what will my realized return be on each bond investment? † How should Jill respond? IssuerFace ValueCoupon Rate Quote PriceYTM Sinking FundCall Period YTM (semi-annual)Nominal YTMEffective YTMFV of couponFV of coupon + FVRealized Return (Semi-Annual)Reali zed Return ABC Energy 10005%703. 120yes34. 0001%8. 001%8. 1601%$1,685. 06 $2,685. 06 3. 41%6. 81% ABC Energy 10000%208. 320yesn/a3. 9999%7. 9997%8. 1597%$0. 00 $1,000. 00 4. 00%8. 00% TransPower100010%109220yes54. 5000%9. 0001%9. 2026%$3,370. 13 $4,370. 13 3. 53%7. 06% Telco Utilities100011%120630no54. 4999%8. 9998%9. 2023%$7,479. 54 $8,479. 54 5. 00%9. 99% In the case of the ABC Energy, 5% coupon bond, the realized return is calculated as follows: Future value of reinvested coupon N=40, I = 2. 5, PV=0, PMT=25 => FV= 1685. 06 Realized return = [(1685. 06+1000)/703. 1]^(1/40) -1 = 3. 41% *2 = 6. 82%