Briefly describe the following types of derivative securities:1. Swaps2. Structured notes3. Inverse floaters

Q: If you know the par value of bonds, the contract rate, and the market rate, how do you compute the…

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Q: What are the Derivative Securities? Elaborate in detail the different types and transactions of…

A: Derivative Contracts are used by parties to earn profit by executing a transaction at a favorable…

Q: Swap transactions are typically heterogeneous in terms of maturities, indexes, used to determine…

A: Swap transactions are derivatives transactions

Q: Distinguish between margins in the securities markets and margins in the futures markets.

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Q: Explain accounting for derivatives.

A: Derivatives: Derivatives are some financial instruments which are meant for managing risk and…

Q: Define speculation in derivatives

A: Individuals and Firms often trade in the derivatives market when they want to enter a trade on a…

Q: Interpret the distinction between real and nominal interest rates

A: Introduction: The term interest rate can be defined as the amount which is due on the proportion of…

Q: “Hedging is the basic function of futures market”. Discuss the statement in the light of uses of…

A: Hedging means constructing a fence around it. In financial markets hedging implies eliminating the…

Q: What are the two important differences between trading securities and HTM investments?

A: Investment: It refers to the process of using the currently held excess cash to earn profitable…

Q: summarizes the types of derivatives based on the NCREIF Index thatare available through Credit…

A: The question is based on the concept of real estate derivatives based on the National Council of…

Q: Briefly explain the following 1. Spot market vs futures market

A: There are two market spot market and future markets.

Q: How do fundamental securities differ from derivatives

A: Fundamental securities and derivatives are actively traded in financial markets. The differences…

Q: Discuss the problems with the traditional bond pricing approach by using the yield to maturity?

A: Bond valuation is the method of finding the fair value of the bond. The fair value means the…

Q: convertible bond

A: Correct Answer :- B Convertible Bond

Q: Some financial instruments are called derivatives. Why?

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Q: illustrate the use of derivatives to hedge portfolio risk with an example?

A: A derivative is depicted as an investment procedure outlined to assist the financial specialist to…

Q: . Distinguish between the following values relative to bonds payable: a.    Maturity value. b.…

A: Definition: Bonds: Bonds are a kind of interest bearing notes payable, usually issued by companies,…

Q: In the bond market, provide a list of the variables that influence the equilibrium interest rate and…

A: Introduction: The price at which the quantity of cash requested is equal to the amount of money…

Q: What is the relationship between bond prices and interest rates? Describe how this link came to be…

A: Bonds have an inverse relationship to interest rates. When the cost of borrowing money rises, bond…

Q: whic

A: Default Premium A default premium is an additional amount that a borrower must pay to compensate a…

Q: Differentiate between the following types of markets: physical asset vs. financial markets, spot vs.…

A: Note : As per the guidelines, only first three parts will be answered.

Q: What is the Relationship Between Swaptions and Bond Options

A: Bond options may be a spinoff contract giving the holder (buyer) the proper, while not the…

Q: What are the differences between held to Maturity and Held for Trading Securities and what are the…

A: Securities held by an entity can either be held to Maturity or it can be Held for Trading…

Q: Describe forwards, futures, and swaps.  What are the features of each type of derivative and how are…

A: A forward contract may be a personalized contract between 2 parties purchasing or offering an asset…

Q: Explain Extended Method for Interest Rate Swap Accounting.

A: Introduction Interest Rate Swap, an important type of derivatives, is the contract between 2 parties…

Q: Explain the Use of Derivatives to Hedge Portfolio Risk?

A: The contract whose value derives from the fluctuation of values of the underlying assets is called…

Q: Briefly define each of the major types of international bond market instruments, noting their…

A: International bond markets are those markets that help investors to diversify their portfolios by…

Q: What relationship exists between bond prices and interest rates? Explain how you came to make this…

A: Bond price: The present discounted value of a bond's future cash flow is known as the bond price.…

Q: Why does a bond’s par or face value differ from its market value? Cite your references

A: Bonds are the debt obligations of a business on which it requires to pay regular interest to the…

Q: How does tr

A: Introduction : In simple words, bonds refers to the fixed income securities and the holder of it are…

Q: Describe Disclosure of Derivatives and Risk.

A: As per FAS 161- Please see below : Disclosures to be made in the footnotes for derivatives- 1. An…

Q: Describe how the price of a futures contract is established in theory, with reference to arbitrage.

A: The concept of Future Price determination is simple:- Theoretical Future price is calculated based…