The most common form of zero-coupon bonds found in the United States is: a. AAA rated corporate bonds b. U.S. Treasury bills c. 30-year U.S. Treasury bonds d. Municipal bonds
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The most common form of zero-coupon bonds found in the United States is:
a. AAA rated corporate bonds
b. U.S. Treasury bills
c. 30-year U.S. Treasury bonds
d. Municipal bonds
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- he most common form of zero-coupon bonds found in the United States is: a. AAA rated corporate bonds b. U.S. Treasury bills c. 30-year U.S. Treasury bonds d. Municipal bondsSociete General Group is the second largest bank in France. One of her business units is investment banking where shares and derivative on shares (e.g: futures long on the German stock market index (DAX futures) are traded. Traders of investment banking take responsibility of an investment amount of maximum 200 million EUR. For derivative positions trading partners demand margin calls (e.g 10% of the investment amount has to be provided as collateral (either in cash or nearly riskless state bonds) to cover potential losses of traders. During the financial crisis in January 2008 internal audit of Societe General detected an open position of 50 billion EUR in DAX futures long of the trader Jerome Kerviel as the counterparties demanded an additional margin call amount of 5 billion EUR. On the day of detection the open position of Jerome Kerviel had a negative instrisic value of -4 billion EUR. 1. Please identify 2 risks which Societe Generale has been confronted with 2. Briefly explain…How would the price of the bond be affected by changing the going market interest rate? (Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest falls below the coupon rate. That is an oversimplification, but assume it anyway for purposes of this problem.)
- Banks often close Repo-Deals with other banks. Today the lower Rhine-Bank (LRB) owns a 6% CHF-fixed coupon bond which was issued by the Swiss Novartis Group and is subject of a Repo-Deal. Three months ago the bank closed the Repo-Deal which originally had a maturity of six months. 1. Please name the risk which is hedged by Repo Deal. 2. Please name two risks which are related to the above mentioned bond. 3. Select one risk of the above mentioned bond and name one means/financial instrument in order to hedge the selected risk. 4. Briefly describe the events or actions which a. Took place three months ago, b. will take place in three months.The owners of a small manufacturing concern have hired a vice president to run the company with the expectation that he will buy the company after five years. For the first $150,000 of profit, the vice president's compensation is a flat annual salary of $50,000 plus 90% of company profits. Beyond the first $150,000 in profits, the vice president's compensation is the salary he receives at $150,000 profit plus 10% of company profits in excess of $150,000.How do you plot the annual compensation of the vice president as a function of annual profit?A corporate bond returns 12 percent of its cost (in present value terms) in the first year, 11 percent in the second year, 10 percent in the third year, and the remainder in the fourth year. What is the bond's duration in years? Please show all the steps including the equation.
- Which of the following is TRUE for a coupon bond? Select one: a. The yield to maturity is greater than the coupon rate when the bond price is above the par value. b. The price of a coupon bond and the yield to maturity are positively related. c. When the coupon bond is priced at its face value, the yield to maturity equals the coupon rate d. The yield is less than the coupon rate when the bond price is below the par valueAn investor has $24,000 to invest in bonds of AAA and B qualities. The AAA bonds yield an average of 6% and the B bonds yield 10%. The investor requires that at least three times as much money should be invested in AAA bonds as in B bonds. How much should be invested in each type of bond to maximize the return? What is the maximum return? Define the variables needed to solve this problem. Organize your given information. (This part NOT graded, but encouraged.) Write the complete linear programming problem, which includes the objective function and all constraints. Graph and make sure all lines are labeled and shaded/solution region is clear and easy to identify. Create a corner point chart. Remember to mark your solution. Answer in a complete sentence or two: How much should be invested in each type of bond to maximize the return? What is the maximum return?Bonds issued by corporations and exposed to default risk are classified as A. corporation bonds B. default bonds C. risk bonds D. zero risk bonds Only typed solution
- The first answer choices are "buys bonds from, sell bonds to". The second answer choices are "does not change, increases, decreases".1. BPI is exposed to the ff. risks Foreign exhange rate Debtors' ability to pay Interest rate movement Household consumption level High ratio of older personnel or management during COVID Number of labor force who were layoff during the period The level of exposure of this bank to 3 other systematic factors are 0.50, 0.65, and 0.70 with each factor change data of 5%, 3.5%, and 1.5%, respectively. This is a blue-chip company which is included in the PSEi and a reasonable assessment of its market sensitivity is 1.38. The government on-the-run bond has interest earnings of 3.8% and PSEi return is 7.8% a. With the listed risks, identify the systematic risks from unsystematic risks. b. USing the identified systematic risks calculate the expected return of BPI stock…MCQs Which of the following can be an underlying for a derivative? Temperature or climate Specified Price Interest or exchange rate All of these Which of the following can be a notional amount for a derivative? Share price Interest rate Number of currency units Exchange rate Derivatives are obtained As hedging instrument to hedge some kind of risk for speculation either a or b neither a or b