This assignment has 2 big questions:
- Bank book profit vs economic profit / market value / guarantees
This one asks you to calculate things like:- asset beta
- expected return on assets using CAPM
- market value of assets
- implied market value of equity
- whether shareholders are really earning an adequate return
- how guarantees affect different stakeholders
- Pricing a debt guarantee using a binomial tree
This one clearly depends on the Excel sheet, because the PDF says the spreadsheet contains the calculations for the tree, including q* and q. - The qualitative answers should be in your own words. For calculation questions, you should also show the equations and numerical inputs you used.

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