Define each of the following terms: e. Swap; structured note

Q: Define each of the following terms:a. Derivatives

A: Underlying assets are the financial assets which decide the value of the Derivatives.

Q: Define coupon payment

A: Bonds: Bond is a debt instrument issued by the company to raise capital against a term to pay a…

Q: Define Unclassifi ed balance sheet

A: Introduction: Unclassified balance sheets are typically utilized only for internal purposes.…

Q: Describe briefly how the HST remittance is calculated.

A: Harmonized sales tax remittance: The harmonized sales tax remittance is the amount of sales tax that…

Q: Define Interest receivable.

A: Introduction: Interest Receivable is an amount which has been earned by the person but the same has…

Q: Define the structure of interest rates and list two theories used to explain the structure.

A: Introduction Structure of interest rates: The yield curve, or term structure of interest rates,…

Q: Define term structure of interest rates

A: The term structure of interest rates generally alluded to as the yield curve, portrays the coupon…

Q: Explain accounting for derivatives.

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

Q: Define Puttable bond.

A: Puttable bond: A puttable bond is a kind of bond that offers the right to the bond holder, but not…

Q: Define Callable bond.

A: Bonds are debt instruments that are issued for raising loan. Bonds include periodic interest…

Q: Interest rate parity; purchasing power parity

A: Both defined in next step

Q: e discount rates of plement method.

A: Introduction: Net price factor is a method of business promotion that is used by companies in order…

Q: What are the three possible methods for reporting EPS whenwarrants and convertibles are outstanding?

A: A warrant is securities that give the bondholder the right, yet not the obligation, to purchase a…

Q: Describe the uses of and accounting for derivatives

A: Accounting for derivatives: It is a method of recording a derivative holding of a company’s balance…

Q: A) Explain under which conditions the uncovered interest rate parity condition could be expressed as…

A: According to the notion of uncovered interest rate parity (UIP), the difference in interest rates…

Q: Under which head is the ‘Debenture Redemption Reserve’ shown in the Balance Sheet?

A: Balance sheet: Balance Sheet is one of the financial statements that summarize the assets, the…

Q: Define compound interest

A: Compound interest: Compound interest is the accumulation of interest to the principal amount of a…

Q: Highlight the key difference between option, futures and forward contracts.

A: Option, futures and forwards are three examples of financial derivatives. Option gives traders the…

Q: Define stretching accounts payable

A: Accounts Payable are the money owed by the company, wherein this comprises short-term loans from…

Q: Define disbursement float

A: Disbursement float is a technique by which entity manages the cash as when a firm disburses the…

Q: Describe disclosure requirements for derivatives and risk.

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

Q: How are derivatives recorded?

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

Q: The contractual interest rate is alway state as a

A: Contractual Interest Rate Contractual interest rate refer as the rate which helps to determine the…

Q: What do we mean by covered interest arbitrage parity? Explain in detail by a diagram.

A: Covered interest arbitrage: It is relationship between forward premium and interest rates. If…

Q: Explain payment-in-kind (PIK) bonds

A: A financial instrument that does not affect the ownership of the common shareholders or management…

Q: Explain what accruals and deferrals do and give examples of each.

A:

Q: Which are two types of interest rates are used in equivalence calculations?

A: Equivalence calculation is used for analysis of an investment or a project based upon the the…

Q: Define arbitrage

A: Introduction: Usually, an arbitrage opportunity is used when there is the option of purchasing an…

Q: Define currency swap

A: Introduction: This question is related to the concept of financial derivatives. Derivative…

Q: Define times-interest-earned (TIE) ratio

A: The number of times can a business pays off its interest obligation with the current earnings is…

Q: Define each of the following terms.e. Convertible security

A: Introduction: Usually, a security is nothing but a financial instrument and it is a tradable…

Q: What are the three principal types of REITs?

A: The question is based on the concept of Real Estate Investment trust (REIT). They are an investment…

Q: Please define the “Interest Rate Parity Theorem” and explain the equation which describes it.

A: An interest rate parity theory is defined as an interest rate differential, which is between the two…

Q: Define a floating exchange rate system.

A: A floating exchange rate is a system in which a country's exchange price is set mostly on basis of…

Q: Describe the Equivalence Calculations with Effective Interest Rates?

A: The effective interest rate is the real interest rate that is charged on the loan amount when the…

Q: Define implicit rate of interest.

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: Describe the mechanics of a fixedrate to floating-rate swap.

A: Under an interest rate swap agreement, one stream of interest payments is exchanged for another by…

Q: Describe briefly the nature of a swap and its primary component.

A:

Q: Using an example, explain how an interest swap works.

A: Solution- Statement-Interest swaps work  Swap-  Swap may be a forward contract painted by a…

Q: Discuss briefly the nature of a swap and its primary component.

A: A swap is a derivative contract trough which two parties exchange cash flows or liabilities from two…

Q: Define CDS, credit default swap

A: CREDIT DEFAULT SWAP (CDS)-          A credit default swap (CDS) could be a money spin off or…

Swaps

A swap is a derivative contract in which two parties are agreed to exchange their cash flows from two different financial instruments for a defined period. In swap contracts, cash flows from one financial instrument are fixed and cash flow from other financial instruments is variable based on the interest rate, exchange rate, and commodity price. Swap contracts are transacted in an over-the-counter system. Swap contracts are utilized to hedge risk and mitigate loss.