Q: if the shareholders position is not protected by a contract unlike the provider of debt how is it in…
A: A shareholder seems to be a person or organization who holds stock in a corporation. Shareholders…
Q: If a firm is interested in the current cost of its debt obligations, then it can simply look at the…
A: Cost on debt can be considered after deducting tax expenses. Cost of debt is eligible for tax…
Q: (a) In a troubled-debt situation, why might the creditorgrant concessions to the debtor?(b) What…
A: (a)The creditor mostly grants the borrower with certain concessions with regard to the settlement.…
Q: Is it true that current liabilities are riskier than long-term liabilities?
A: Liabilities: Liabilities are debt and obligations of a business. These are the claims against the…
Q: Which of the following risks cannot be hedged? A. Credit B. Liquidity C. Currency D. Duration
A: Some risk can be hedged using derivatives
Q: Why onerous contracts are considered as a provision, even though they do not always come with a high…
A: Onerous contract is the contract that would cost the business more to fulfill than what the company…
Q: . What is the primary motive for short selling? Describe the basic short-sale procedure. Why must…
A: Short position are basically to get profit from the downside.
Q: Explain the difference between the forward price and the value of a forward contract. Give an…
A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…
Q: Why do firms hedge their risk and what determines the choice of contract for hedging?
A: Hedging is a risk management approach that involves acquiring an opposing position in a comparable…
Q: A type of risk where the issuer of the security will not pay interest or principal. *
A: Risk is defined as the probability with which an outcome or an investment in a security's actual…
Q: The seller of a put option is not necessarily the seller of the underlying asset. True False
A: The options can be sold even though the underlying assets are not held by the option sellers.
Q: If a firm does not provide for accrued liabilities, what problems may thefirm face?
A: Assuming this is the case, at that point. The Organization has not gotten the accrued liabilities.…
Q: In an out-of-court res required holders, you covenants of the hold True False The riskier the…
A: Ans. In case of out of court restructuring, the debtor and creditor comes to a mutual agreement for…
Q: why a company would prefer to hedge over taking an insurance to minimize on risk
A: Company faces many kinds of risks during the operating of the company so company has to manage all…
Q: How contract is discharged by subsequent impossibility?
A: Discharge of agreement or contract implies the end of the authoritative connection between the…
Q: Why is it important that in an underwriting the investment banker does not overvalue (overprice) or…
A: It is significant that an investment banker must not be under pricing or overpricing a security on…
Q: what is the difference between unsecured and secured transactions in terms of default
A: These types of transactions are based on the creditworthiness. These are loan or other credit…
Q: What is the fair value option? Briefly describe the controversyof applying the fair value option to…
A: Meaning of fair value option:
Q: Which of the following is the main objective of P2P insurance O a. Less Fraudulent Claims O…
A: The acronym P2P insurance stands for peer to peer insurance. It is formed by a group of people who…
Q: Marketable securities are also considered as liquid assets but not as liquid as cash. * Right O…
A: Correct answer: Right. Cash and the Marketable securities both are types of liquid assets. A liquid…
Q: the stakeholders position is not protected by a contract -unlike the provider of debt- how is it in…
A: Shareholders are the individuals who get ownership of the organization when they invest in their…
Q: What is insolvent?
A: The tern insolvency is failure to pay the borrowed money on time. This can be both an individual or…
Q: Value forward agreements normally have adjustments dependent on the price of the equity, worth of…
A: The value of the forward agreement is an agreement that has already specified its assets to be…
Q: An implied condition of pooling risks with insurance is that the event being insured against is…
A: Insurance: An arrangement between the two parties( Insurer & Insured) where the insurer company…
Q: Which of the following arises when the seller's right to consideration from a customer is…
A: A receivable is recognized by the entity when the entity's right to consideration is unconditional…
Q: S1: One characteristic of an insurance contract is to transfer insignificant risk from the…
A: According to PFRS 4, an insurance contract includes the significant insurance risk that is…
Q: what is the essential feature of a forward contract that makesa futures contract a type of forward…
A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…
Q: to the individual or company that 3. A security is issues it. to the person who buys it, but A)…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: What does underwriting mean? (b). Differentiate between “underwriting” and “best…
A: Underwriting is a function provided by banks, insurance companies, investment houses, etc... The…
Q: a. What is the actuarially fair cost of full insurance against the loss if the company does not make…
A: The question belongs to decision making where there are two options for mitigate future loss. The…
Q: Does collateral reduces moral hazard by borrowers? Why?
A: Introduction: A collateral asset is an asset that a lender accepts as payment for a loan. Depending…
Q: The potential loss incurred from purchasing a call option is finite, but the potential loss to the…
A: Let's figure out the payoff to the seller or writer of the call option at the time of expiration of…
Q: 4 What is counter party risk? Which financial contracts does it apply to?
A: The type of risk under which there are possibilities that either of the parties will not be able to…
Q: Which of the following does not relate to credit risks? a. Credit risk is the possibility of losing…
A: First of all we need to understand the meaning of Credit risk- Credit risk is the probability of…
Q: Define the following terms: common pool problem, holdoutproblem, automatic stay, cramdown,…
A: Hey, since there are multiple subpart questions posted, we will answer the first three questions. If…
Q: What does insolvent mean
A: Insolvent is a term that relates to the debtors payment.
Q: Payoff from entering into a forward contract does the buyer have more to gain going long than the…
A: Forward contract is the contract which allows a buyer to buy a certain stock or other assets while a…
Q: What are those factors? Which is most AND least significant?
A: Following are the factors that affect option contract: Underlying Price Strike Price Time to…
Q: CBOE option market makers are also called liquidity providers. True or False?
A: CBOE stands for the Chicago Board Options Exchange.
Q: Explain why a security is considered to be liquid and state its advantage to an investor
A: A liquid asset is a resource that can be quickly transformed within a short period of time into…
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: Physical settlement of a credit default swap avoids the need to determine the termination value of…
A: Credit default swap- is a derivative instrument. Under this the credit risk of a fixed income…
1. If an investor has unique needs and does not care about liquidity, which contract is right for them: future or forward?
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- What tools are available for solving adverse selection and moral hazard problems in debt contracts and in equity contracts?If a firm does not provide for accrued liabilities, what problems may thefirm face?Payoff from entering into a forward contract does the buyer have more to gain going long than the seller has to lose going short, profits if the price of the underlying at expiration exceeds the forward price and/or gains from owning the underlying versus owning the forward contract are equivalent? Explain why one or more of the options above are correct. and why, if any of the remaining options are incorrect.
- Why do firms hedge their risk and what determines the choice of contract for hedging?The _______________ problem is when customers who are most likely to have a claim against an insurance company are those quickest to apply for an insurance contract. Group of answer choices a. Capital adequacy b. Default risk c. Adverse selection d. Mismatched maturitywhat is the essential feature of a forward contract that makesa futures contract a type of forward contract relevant or not, frequent changes in dividend policy can harm a firm, is this true or false. why
- If the stakeholders position is not protected by a contract -unlike the provider of debt- how is it in fact made viable?How contract is discharged by subsequent impossibility?How does regret avoidance contribute to the disposition effect? What kind of steps do professional traders take to avoid holding losers?
- The risk of an accounting loss from a financial instrument due to possible failure of another party to perform according to terms of the contract is known as: [A] Credit risk [B] Investment risk [C]Market risk [D]Opportunity risk.Which of the following arises when the seller's right to consideration from a customer is conditional upon something other than the passage of time? A receivable A contract asset A contract liability None of these choicesWhat is insolvent?
