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1. A
a. lower than the par value
b. higher than the par value
c. lower than the discount value
2. Risk of losing a market due to forex change.
a. economic risk
b. market risk
c. transaction risk
Step by step
Solved in 3 steps
- Market risk embodies the following risks except: O a. Financial. O b. Interest rate. Oc Tax. O d. Inflation. Clear my choiceAmong the factors considered in the quantitative models of default risk: a. Business cycle b. Reputation c. Collateral d. Leveragefinancial risk management 1. The seller of a put option a not necessarily the seller of the underlying asset.( true / false) 2. Interest rate risk is the potential for investment (....loss/gain..........). that result from a change in the interest rates. If interest rate (rise/fall)..., for instance, the value of the bond or fixed-income instrument will decline.
- FINANCIAL RISK MANAGEMENT 1. Duration is a measure of interest rates risk. (True/ False) 2. Bond price and interest rates are inverserly related. (True/ False) 3. Lower duration means higher interest rates risk ( inverse relationship) (True/ False)13. Securities with less predictable prices and have longer maturity time is considered as____. A. cash equivalents B. long-term investments C. inventories D. short-term investmentsMarket risk ________. a. is equal to the rate of return generated by a risk-free asset b. cannot be eliminated, as it is non-diversifiable c. is synonymous with diversifiable risk d. is synonymous with financial risk
- financial risk management fill in the blacks with correct answer. Interest rate risk is the potential for investment (....loss/gain..........). that result from a change in the interest rates. If interest rate (rise/fall)..., for instance, the value of the bond or fixed-income instrument will decline.The risk associated with the overall market is referred to as _____ risk. a. unsystematic b. diversified c. portfolio d. systematicRm-R is read as: O a. The return offered by the market over and above the risk-free rate O b. Market risk premium- Oc. Excess return on the market C. Od. All options are correct
- Changes in yield-to-maturity (YTM) produce market price risk and reinvestment risk. A __________ in yield-to-maturity (YTM) increases a bond’s price and __________ its reinvestment risk. A. decrease / decrease B. decrease / increase C. increase / increase D. increase / decreaseWith regard to interest rate sensitivity measures and bonds: Group of answer choices C. Convexity attempts to capture the sensitivity of a bond’s duration to changes in interest rates. D. Both B & C B. Duration is related to yield approximation and convexity is related to price. A. Convexity is related to yield approximation and duration is related to priceThe Capital Asset Pricing Model (CAPM) considers which type of risk in pricing the expected returns and risk of securities? A) Systemic risk. B) Unsystemic risk. C) Diversifiable risk. D) Non-market risk.