Repricing risk refers to:   Question 11 options:   Risk of a change to the maturity of a credit   Risk from a change to the interest rate on a loan   Risk from reclassification of the creditworthiness of the borrower   Risk of a change to the repayment schedule of a loan

1. What is the most accurate measure of interest rates? a) Current Yield b) Nominal Interest Rate c) Simple Interest Rate d) Yield to Maturity

Most evidence suggests that a positive maturity risk premium exists. How would thisaffect your calculations when determining interest rates?

How is a credit default swap like insurance?

Macaulay duration is the optimal holding period to immunize the interest rate risks, namely to make the reinvestment risk and selling price risk offset one another completely. O True O False

What is the greatest risk in mortgage banking? Group of answer choices Price Risk Fallout Risk Interest Rate Risk Pipeline Risk

A synthetic Collateralized Debt Obligation uses credit default swaps to increase the credit risk of its assets. O True O False

[Question 2] The firm ABC currently pays no dividends to shareholders. Its stock is, however, expected to pay the dividend of ¥ 80 per share a year from today. Thereafter, the dividend is expected to grow at an annual rate of 10% for the next four years and from the fifth year from today, it grows at a constant rate of 3% per year thereafter. Assuming the appropriate discount rate is 12%, answer the following sub- questions. (2a) Calculate the present value of dividends paid from the next year to the fifth year from today. (2b) Calculate the present value of dividends paid from the sixth year from today and thereafter. Then estimate the intrinsic value of the ABC stock today. If the market price of the stock is equal to the intrinsic value, what is the expected dividend yield today? (2c) What do you expect the stock price to be in one year from now? Confirm the expected rate of return, which is the sum of dividends yield and capital gains yield, is equal to the discount rate.

A credit default swap (CDS) is a privately negotiated contract which you can use to:   Question 2 options:   hedge prepayment risk on a pool of mortgages.   hedge default risk on fixed income assets.   hedge interest rate risk on fixed income assets.   hedge exchange rate risk on euroyen deposits.