If the credit quality of the issuer falls sharply, what is your main concern? a.The share price. b.The volatility of the underlying c.The default risk. d.A rise in risk free interest rates
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If the credit quality of the issuer falls sharply, what is your main concern?
a.The share price.
b.The volatility of the underlying
c.The default risk.
d.A rise in risk free interest rates
Give typing answer with explanation and conclusion
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- Banks use gap analysis to measure interest rate risk in their balance sheets. If firm XYZ is said to have a positive gap, this means: Group of answer choices C. Rate-sensitive assets exceed rate-sensitive liabilities B. Long-term assets are funded with short-term liabilities D. Rate-sensitive assets equal rate-sensitive liabilities A. Liabilities reprice before assetsfinancial 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.When borrowers tend to pay back the loans to bankers earlier, the bank is facing a. Repricing risk b. Yield curve risk c. Basis points risk d. Embedded options risk
- An increase in the riskiness of financial securities results in a_______ in the supply of loanable funds and hence shift in the supply curve to the_______ O Decrease, leftO Decrease, rightO Increase, left O Increase, rightChanges in interest rates may change the market values of the bank's assets and liabilities by different amounts is a Select one: O a. Spread Risk O b. Refinancing risk O c. Reinvestment risk Od. Price RiskWhich of the following is a characteristic of a money market financial instrument? O A. High risk B. Low risk C. Low credit quality O D. Equity instrument
- 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 diversificationDuration is important in understanding a fixed income portfolio because A. it is used in the capital asset pricing model B. it measures the interest rate sensitivity of a bonds value C. It measures the correlation with a bank's stock price D. It causes contagionFINANCIAL 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)
- Please explain it why choosing option correct and wrong # Which of the following best describes interest rate risk? The risk that credit ratings will change, affecting the value of assets and liabilities The risk that banks will not be able to meet their liquidity requirements None of the above The risk that interest rates will rise or fall, affecting the value of assets and liabilitiesThe additional return over the risk-free rate needed to compensate investors for assuming an average amount of risk. a. Market Risk Premium b. Risk-free rate С. Stock's beta O d. Security Market Line e. Required Return on StockWhich of the following is NOT an external method of interest rate risk management? * A. Using an interest rate swap B. Using financial futures C. Using an off-balance-sheet strategy, such as a forward rate agreement D. Having fixed-interest assets financed by fixed-interest liabilities and equity