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Money and Capital Markets: Financial Institutions and Instruments in a Global Marketplace, 8/e

Peter Rose, Texas A & M University

Money Market Instruments: Commercial Paper, Federal Agency Securities, Acceptances, and Eurocurrency Deposits

Standard & Poor's Questions

Chapter 12 in Money and Capital Markets: Money Market Instruments--Commercial Paper, Federal Agency Securities, Bankers’ Acceptances, and Eurocurrency Deposits

Question 1

Which companies on the S&P Market Insight list hold substantial Eurocurrency deposits? How can you tell?

Question 2

One of the largest federal agency security issuers is Freddie Mac (FRE). See if you can answer the following questions about this important federal agency.

(a) What is Freddie Mac’s role in the financial marketplace?
(b) How much market capitalization did it have early in 2002?
(c) How many shareholders does Freddie Mac have? Where are its shares listed?
(d) Like so many federal agencies is Freddie’s return on equity and profit margin above or below industry averages? Why?
(e) Is its ratio of debt to equity capital relatively high or low? Why?
(f) Are its earnings growing (as measured by EPS)?
(g) What two principal markets does it participate in?
(h) Who is its principal competitor?
(i) According to the most recent figures how many mortgages does it hold in its portfolio?

Question 3

Among the largest traders in and issuers of commercial paper are security dealers and finance companies. See if you can discover using S&P’s Market Insight how much in commercial paper borrowings security dealer Merrill Lynch had outstanding at year-end 2001? Was Merrill’s volume of paper issues rising or falling? Why do you think this is so?

2003 McGraw-Hill Higher Education
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