A guarantee issued by an FI that obligates the FI to pay if the purchaser of the letter defaults on a debt is called a a. loan commitment. b. forward rate agreement. c. credit swap agreement. d. collar. e. None of these options are correct.

Q: are, in essence, an insurance contract against the default of one or more borrowers.

A: A credit default swap (CDS) is a financial derivative or contract that allows an investor to "swap"…

Q: All of the following are differences between IFRS and GAAP in accounting for liabilities except: (a)…

A: Generally Accepted Accounting Principles (GAAP): Generally Accepted Accounting Principles are the…

Q: bonds is incorrect

A: What is Bond? bond is an instrument of indebtedness of the bond issuer to the holders. This…

Q: he sale of a mortgage portfolio by setting up mortgage pass-through securities is an example of A)…

A: A pass-through security is where mortgage holder create a security from pool of mortgages and sell…

Q: The realized gain (loss) on sale of debt investments with an objective of collecting contractual…

A: Realized Gain: When an investment is sold for a greater price than it was originally acquired, this…

Q: In hedging, interest rate swap (IRS) can be used to hedge against rising rates, falling rates,…

A: Hedging is a technique or a strategy which is used to reduce any risk involved in investment. This…

Q: A protective covenant in a bond indenture:   Group of answer choices A. protects the borrower from…

A: Bond covenant is the legal agreement between bond issuer and bond holder which consists of all terms…

Q: Which of the following statements relating to bonds is incorrect? * O The owner of a registered bond…

A: Bonds are a form of loan or debt which is being issued or raised by the business, on which regular…

Q: 1. The discounting of note receivable is accounted for as a secured borrowing. 2. The discounting of…

A: Note receivables: Note receivables can be defined as the written promise made by the borrower to…

Q: A trade finance instrument not supported by bank guarantee is called   O a. Irrevocable LC   O…

A: Answer: There are various types of financial instruments that can be traded on return of any goods…

Q: hort-term notes payable: O Can replace an account payable O Can be issued in return for money…

A: Short term notes payable is a current liability. It is an obligation to pay a specified sum plus…

Q: bond issuance costs are incurred

A: First option is wrong because one among the options is correct. Second option is wrong because…

Q: Which of the following would be considered examples of a short-term discount security?   Select…

A: A debt security that gets matures in one year or less and is issued at the discount to the face…

Q: Canceling the original loan and signing a new loan agreement with different terms to settle troubled…

A: The question is related to Canceling the original loan and signing a new loan agreement with…

Q: -----is not included in the category of payment guarantee. A. Deferred payment bond B.Guarantee…

A: Payment Guarantee is a type of consent given for the payment security in the future. Payment…

Q: Repricing risk refers to:   Question 11 options:   Risk of a change to the maturity of a credit…

A: Repricing refers to any change in the interest rate because of change in maturity date or may be due…

Q: Mezzanine Debt is generally collateralized by O A first deed of trust O A high rate of interest O A…

A: Mezzanine debt is a financing instrument which is a hybrid of debt and equity. It has higher risk…

Q: f bonds are issued at a discount, it means that the   a. bondholder will receive effectively less…

A: Solution: If bonds are issued at a discount, it means that the "market interest rate is higher than…

Q: is a common type of debt instrument used for house loan and is considered as very secure. a. None of…

A: The financial tools that can be used to obtain financing by individuals, governments, and…

Q: .In a security agreement, the ___________is the party who owes money and the ____________is the…

A: A security agreement is an agreement between the creditor or a lender and debtor or the borrower, in…

Q: At the maturity of a note​ payable, a borrower will pay​ ________.   A. the interest amount only…

A: Note​ payable: Note​ payable is also referred as promissory note. In this, borrower obtains a…

Q: True or false When a non-interest-bearing note has been issued at a discount or premium and is fully…

A: Non-interest bearing note are those liabilities of the entity which are to be repaid after certain…

Q: Bond discount should be presented in the financial statements of the issue as a(n) Contra liability…

A: >Bond discount is recorded in the books of account as the difference between Face value of Bond…

Q: Which of the following statements regarding forward rate agreements (FRAS) is false? O An agreement…

A: A forward contract is a customized agreement between parties to acquire or sell an item at a pre -…

Q: Which of the following statements correctly describes aspects of simple interest as discussed in…

A: Simple interest is one of the methods used for charging interest on a loan by multiplying the…

Q: Which of the following statements relating to bonds is incorrect? A. A bond’s face value is the…

A: Bonds are a form of loan or debt which is being issued by the company, on which regular interest…

Q: When a borrower is unable to repay its loan, it is common that the lender would negotiate with the…

A: Debt restructuring is available for companies, individual and also countries. It is adapted to…

Q: Which of the following statements is false?   A.   Asset-backed securities (ABS) may be backed by…

A: A financial asset-backed securities (ABS) is a form of financial investment that is backed by a pool…

Q: This clause, typically found in a loan agreement, permits the holder to declare the entire amount of…

A: An agreement that regulates the mutual promise of borrower and lender is termed as a loan agreement.…

Q: A. must equal the effective interest rate. B. is greater than the effective interest rate when…

A: Introduction : In simple words, When bonds are offered at a premiums, the contract interests rate is…

Q: The borrowing base used to guarantee collateral on an operating line of credit is highly dependent…

A: Borrowing base means the maximum amount that a borrower can borrow from a lender. Any excess of…

Q: The creation of a new security by combining otherwise separate loan agreements is called O a)…

A: A loan agreement simply refers to the agreement between a lender and a borrower for a certain sum…

Q: The Interest rate on which of the following is the LIBOR? a. Bankers' acceptances b. Repurchase…

A: LIBOR, the acronym for London Interbank Offer Rate, is the global reference rate for unsecured…

Q: RUE OR FALSE? The effect of a lender agreeing to give the borrowing entity a grace period after the…

A: Current liabilities: Current liabilities are the obligations that are to be met within a year or 12…

Q: Which of the following is classified as nonmonetary? a. Warranty liability b. Accrued expense c.…

A: The question is multiple choice question Required  Choose the Correct Option.

Q: The market flex provision in an underwriting/syndication agreement means that the underwriter/lead…

A: The provisions which give the underwriter or the syndicate or the arrangers some amount of the…

Q: ll of the following are differences between IFRS and GAAP in accounting for liabilities except: a.…

A: Definition:   Bonds: A bond is a debt instrument, which is repaid along with a specific rate of…

Q: Why are the credit default swaps, in essence, an insurance contract against the default of one or…

A: Credit default swaps are derivatives contract between two investors in which investors who has lend…

Q: The prime lending rate of commercial banks is an announced rate and is often understated from the…

A: The prime lending rate is a type of interest rate which commercial banks charge the most…

Q: A synthetic Collateralized Debt Obligation uses credit default swaps to increase the credit risk of…

A: synthetic collateralized Debt obligation invest in non-cash assets to gain exposure on fixed assets…

Q: ________ bonds are characterized by interest payments that are required only when earnings are…

A: Solution- Revenue bond-Revenue bonds are a category of municipal bond issued to fund public comes…

Q: A credit derivative allows creditors and debtors to _________ their exposure to credit risk. For…

A: A credit derivative is a financial contract that allows the parties to minimize their exposure to…

Q: In order for the seller of securitized securities to remove the assets (i.e. mortgages) from the…

A: The answer is given on the next sheet as due to the agreement the entry could be reversed in the…

Calculating the Return On A Loan