What is a “natural hedge”? Give some examples of natural hedges.

Q: what is an available-for-sale security?

A: Securities are financial instruments that can be traded easily. The entities use these securities to…

Q: Define asset-backed security

A: Answer: Asset backed security is nothing but a security is made up of other financial securities.…

Q: What is the benefits and draw backs of long straddle strategy?

A: A long straddle is when the investor buys both a call and a put option on the same stock, with the…

Q: What is a derivative security?

A: Financial Instruments: It represents assets that are traded in the financial markets and are…

Q: Describe a situation when a. Investor would want to use a limit order.

A: The limit order's primary objective is to set a specific price of a security in order to buy or sell…

Q: Define symmetric hedge

A: Introduction: It is a technique that reduces risk, like currency fluctuations, stock price…

Q: What is the Security Market Line (SML) ?

A: Answer: A security market line (SML) is a line that representing the relationship between systematic…

Q: Explain Prepayment Patterns and Security Prices?

A: The lending process is subjected o interest rates changes which may trigger prepayment of the…

Q: What is the value of the security market line?

A: Security Market Line: The graphical representation of Capital Asset Pricing Model is known as…

Q: How does a nonsymmetric hedge differ from a natural hedge? Provide an exampleof a nonsymmetric…

A: Natural Hedge denotes to the circumstances under which total risk might be removed by means of an…

Q: Explain types of Security Issuers and Guarantors?

A: Types of security issuers are described as follows: Banks– Banks generally issue securities to meet…

Q: What are the benefits of netting?

A: Answer Defination:- Netting is a process by which an exposure or obligation is reduced by combining…

Q: Explain Derivative security?

A: Derivatives security: A derivative security is considered as a financial instrument whose value is…

Q: When valuing specific properties investors must consider?

A: Valuation of the real estate properties includes the estimation of the rental payments that are…

Q: What is perfect hedge?

A: Hedge: A hedge is referred as an investment to decrease the risk of opposing price movements in an…

Q: How are the characteristics of an organized security exchange differ from an over the counter…

A: Financial markets contain any marketplace where securities such as the stock market, bond market,…

Q: Explain Valuation Fundamentals?

A: Answer: Valuation is nothing but a numerical method in which the true value of an asset or business…

Q: Detail some of the advantages and disadvantages of setting up a trust.  Why set up an irrevocable…

A: Setting up the trust Advantages: There is a possibility of limited liability when there is an…

Q: Discuss various types of security and non- security financing.

A: Step 1   Security is a financial instrument, usually any tradable financial asset. The definition of…

Q: What is an Anti-dilutive Security

A: Anti-dilutive securities are those securities that a company has issued and which can get converted…

Q: Is funding a type of risk?

A: Funding means providing the funds to the party and charging interest rates from them. Firms need…

Q: Define fair value hedges.

A:

Q: What are the rules of safe harbor?

A: Tax: Tax refers to a compulsory payment or a contribution to the state revenue, levied by the…

Q: What is the electronic fund's transfer (EFT) system?

A: Todays generation is introduced to digital payments and any business whether it be large or small…

Q: Define short hedges

A: A strategy through which the potential loss reduces that occurs from the movement of the asset's…

Q: What is the reinvestment rate assumption when using MIRR?

A: Modified Internal Rate of Return: This method is used to rank investments or projects for an…

Q: Define asymmetric hedge

A: A strategy that helps to reduce the loss which occurs from the movement of the asset's price is term…

Q: Explain safe harbor rules?

A: Tax: Tax refers to a compulsory payment or a contribution to the state revenue, levied by the…

Q: What are the differences between bottom-up and top-down approaches to security valuation? What are…

A: A top-down method to security evaluation starts with an examination of the worldwide and national…

Q: What does a project’s stand-alone risk reflect?

A: Stand alone risks are risks that are associated with a particular asset or a project. Companies when…

Q: Explain the accounting for hedges.

A: Hedge:   A hedge refers to a financial instrument that are used by investors to offset the potential…

Q: what does a perfect hedge mean? when is a hedge perfect?   by ur own word please

A: A perfect hedge is a position taken by an investor that eliminates the risk of an existing position…

Q: (a) Which of X, Y, and Z is a risk-free security when considered on a standalone basis?

A: Portfolio is the collection of securities or investments. The return on portfolio is the weighted…

Q: What is long hedges?

A: The long hedge is the long future position in future contract. The long hedge is used to stabilize…

Q: What is country risk?

A: Country risk make a case for the possibilities of a distant government's financial organization…

Q: What does Security Market Line Capture?

A: Security market line (SML) is a straight line sloping upward depicting an expected rate of return as…

Q: What is a long term security? Gives two examples.

A: Every investor invests in specific security with the expectation of receiving a good return,…

Q: What is a “convertible security”?

A: Securities: Securities refers to a negotiable financial instrument that holds some type of monetary…

Q: What is natural hedge?

A: Hedging  is a strategy in which financial instruments and strategies are used to reduce the risk.…

Q: Why are safety stocks required?

A: Safety stock is an additional quantity of an item held by a company in inventory to reduce the risk…

Q: Given the information in the following table, what is the expected return of the security?

A: Expected Return: It refers to the amount of gain/loss anticipated by the investor on an investment.…

Q: What is an inter vivos trust?

A: Inter Vivos Trust: An inter vivos trust is a kind of trust which is made in the lifetime of the…