Discuss the following hedging technics and where possible give examples: Leads and lags , Risk sharing , Parallel loans , Matching of cash flows What are dual currency bonds?
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Discuss the following hedging technics and where possible give examples:
- Leads and lags , Risk sharing , Parallel loans , Matching of cash flows
- What are dual currency bonds?
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- Which of the following is not a main core function of the financial system?a. Provide a payments system for the exchange of goods and services.b. Provide mechanisms to separate funds for smaller-scale investmentc. Provide the channels to transfer funds and economic resources across industriesd. Provide ways to manage uncertainty and mitigate risk According to the market segmentation theory of the term structure,a. the interest rate for bonds of one maturity is determined by the supply and demand for bonds of that maturity.b. bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time.c. investors' strong preference for short-term relative to long-term bonds explains why yield curves typically slope downward.d. only A and B of the above. Costs associated with the correspondent bank process include:a. Interestb. Currency conversion spreadc. Reputation costsd. Payroll costsIn which economic conditions would a central bankwant to use a “forward-guidance” strategy? Based onyour previous answer, can we easily measure the effectsof such a strategy?Which hedging strategy uses an exchange rate agreed to today for future delivery of currency to minimize the financial institution’s risk exposure? a. Hedging with forwards. b. On balance sheet hedging. c. Off balance sheet hedging. d. Spot hedging.
- Explain this function of BSP -Liquidity management -determination of exchange rate policy -lender of last resort -Currency IssueWhat is the diferrence between finanical institutions and financial markets and Can they both run more smoother.What distinguishes a money market instrument from other financial instruments? Please give us a wide response.
- The risks below faced the financial institutions: Off-Balance-Sheet Risk Market Risk Foreign Exchange Risk What causes these risks, and How to mitigate them? I understand these risks are interdependent on each other.Demonstrate how individual and portfolio credit risk management issue can be resolved through the application of a The Migration Analysis Method Then discuss how this model can mitigate future credit risk issues for Washington MutualBriefly explain how banks can optimize their position through managing their use of currencies?
- Which of the following is a matured money market instrument widely used in the USA, Europe and Asia where both cash and securities are the motivators? a. Commercial Papers b. Treasury Bills c. Repurchase Agreements d. Certificate of DepositsWhat are investor motivations for acquiring dual-currency and currency-option bonds? Which is better, and why?Explain the following concepts in relation to the role that banks play in financial markets: i) Loan size transformation ii) Maturity transformation iii) Risk transformation