A financial institution that invests $50 million into Digicel Fixed Rate 10 year bonds is exposed to which of the following risks? Question 14Answer a. Credit and interest rate risk. b. Liquidity and technology risk. c. Solvency and technology risk. d. Off-balance sheet and interest rate risk.
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Question 14Answer
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- A financial institution that invests $100 million into corporate bonds is exposed to which of the following risks? a. Credit and interest rate risk. b. Liquidity and technology risk. c. Solvency and technology risk. d. Off-balance sheet and interest rate risk.Which of the following is an example of a money market instrument? (Select all that apply) a. 2-year Treasury Bond b. Certificate of Deposit C. Swap d. Stop-call7. A. Define duration and explain how duration is used in the management of a portfolio of financial securities. B. Why is duration a better measurement of interest rate risk than the time it takes to reduce the principal balance on a loan by 50%? C. How does maturity and yield affect the sensitivity of a financial security to changes in interest rates?
- 3. A. Rank the following financial securities in order of interest rate risk (1 being the lowest and 3 being the highest).a. 10-year traditional coupon bondb. 10-year zero-coupon bondc. 10-year fully amortizing loan B. Rank the following financial securities in order of reinvestment risk (1 being the lowest and 3 being the highest).d. 10-year traditional coupon bonde. 10-year zero-coupon bondf. 10-year fully amortizing loanBased upon risk, which of the following financial assets is likely to have the highest required rate of return? Select one: A. A corporate bond B. A U.S. Treasury bill C. A bank certificate of deposit D. A share of common stockFrom page 9-2 of the VLN, what is the first thing you want to identify when approaching a bond problem? Group of answer choices A. Annual bond or semiannual bond B. Whether the market rate is different from the stated rate. C. The cash flows provided by the bond. D. The company's debt to equity ratio.
- § Field: Business & Finance homework help Report Issue “Bond Risk Management” Please respond to the following: Given the Federal Reserve Board’s current and forward-looking position on interest rates, predict the level of risk associated with investing in bonds and recommend a portfolio percentage for investment in bonds for a financial institution. Provide support for your recommendation. Assess how an increase in the interest rate would change your recommendation provided above. Indicate the basis for your rationale. Please provide one citation/reference for your initial posting that is not your textbook. Please do not use Investopedia or Wikipedia.4) I need help with finance homework questions asap, Multiple choice question. Bond ratings measure a company's: Exchange rate risk. Equity risk. Interest rate risk. Operating risk. Default risk.The time value of money is used in calculating bond prices because: Group of answer choices A - The company might choose to repay the bonds prior to their maturity date B - Bond investors receive future payments and purchase bonds with current dollars C - The amount to be repaid at maturity will change as market rates change D - Cash interest payments to bondholders will change as market rates change
- Nominal interest rate of a corporate bond includes all of the following components EXCEPT _____. Group of answer choices a. real risk-free interest rate b. expected inflation c. unexpected inflation d. credit risk premiumFrom page 9-3 of the VLN, what are the cash flows from a bond that must be present valued back to today? Group of answer choices A. The face amount only B. The interest payments only C. The issue price only D. The face amount and interest paymentsWhat is a maturity risk premium? Group of answer choices -A premium that reflects interest rate risk. -The risk of capital losses to which investors are exposed because of changing interest rates. -The difference between the interest rate on a U.S. Treasury bond and a corporate bond of equal maturity. -The rate of interest that would exist on default-free U.S. Treasury securities if no inflation were expected.