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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
- Unsystematic risk is * a.the risk associated with movements in securities prices B.higher when interest rates rise C.the risk of loss of purchasing power D.reduced through diversificationfinancial 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)
- Market risk embodies the following risks except: O a. Financial. O b. Interest rate. Oc Tax. O d. Inflation. Clear my choiceMarket 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 riskAmong the factors considered in the quantitative models of default risk: a. Business cycle b. Reputation c. Collateral d. Leverage
- 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 investmentsfinancial 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. systematic
- Rm-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 correctWith 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 priceChanges 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 / decrease