Which of the following is not a prudent practice in hedging against transactional exposures?   A. Use only options to capture the potential upside surprises.   B. Hedge against all receivables and payables in all markets the company operates.   C. Only hedge if the currency is a major currency.   D. none of the above.

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: Hedging is a risk management strategy that is used in limiting or offsetting probability of loss…

A: Financial risk managers analyse the market trend and accordingly take financial decisions.Roles and…

Q: Is it reasonable to ignore IDIOSYNCRATIC RISK and care only about MARKET (SYSTEMIC) risk? What about…

A: Definitions  Idiosyncratic risk : In simple words, idiosyncratic risk can be understood as the risk…

Q: Which of the following is not a characteristic of an efficient market? Investors can frequently…

A: Efficient Market Hypothesis is a hypothesis theory in finance which states that asset prices reflect…

Q: Banks find it necessary to accommodate their clients’ needs to buy or sell FX forward, in many…

A: Foreign markets are the markets that are outside the domestic country and deals with various…

Q: Which of the following is NOT an external method of interest rate risk management? *       A. Using…

A: An interest rate risk is the risk of negative affected of the value of an investment by unexpected…

Q: The following are bad consequences of inadequacy of financial risk management EXCEPT a. The entity…

A: Risk management is the process which involves a proper identification of the risks that an…

Q: Which of the following is NOT a benefit of investing in ADRs? The dividends are received in U.S.…

A: answer.  American depositary receipt  is a certificate issued by a U.S. bank. ADRs is denominated in…

Q: Match the risk with the correct transaction (if any): v The DC appreciates, altering relative prices…

A: The appreciation of domestic currency means that more unit of foreign currency can be purchased from…

Q: which of the following statements about trading risk is correct? it is easily identified by careful…

A: Trading risk refers to the risk that loss may occur as the chosen investment may not reach the…

Q: Discuss the following statements: “(1) individual financial institutions will generally have…

A: While looking at various sectors of an economy, we can observe that they all perform a little…

Q: According to the efficient market, which of the following are not true? Select one: O the market has…

A: The Efficient-market hypothesis also known as EMH is a hypothesis in finance which states that…

Q: Hedging is a risk management strategy that is used in limiting or offsetting probability of loss…

A: Financial risk managers analyse the market trend and accordingly take financial decisions. Roles and…

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: Which of the following is not an assumption of technical analysis? A.The security under analysis is…

A: Technical Analysis is used to find out trading opportunities by analyzing the past trends and…

Q: Which öf the föllowing statements about arbitrage is correct? Select one: O a. A risk averse…

A: Arbitrage is the position when a person buy some product from one market and sold it in another…

Q: The market compensates investors for accepting which type(s) of risk? O None of the listed…

A: Risk refers to the level of uncertainty in returns that an investor expects while making…

Q: Which of the following statements relating to hedge accounting requirements is false?     To…

A: Meaning of hedge accounting :- It is a method in which entries are adjust according to the fair…

Q: One of the arguments for the irrelevance of exchange rate exposure management is that: O a.…

A: As per irrelevance of exchange rate exposure management is that investors in Multinational…

Q: What steps will a bank take to put in place an aggressive /defensive strategy in the face of rising…

A: If there is a difference between the interest sensitive assets and interest sensitive liabilities of…

Q: Marketable securities are liquid financial instruments that can be quickly converted into cash at a…

A: Cash and cash equivalents are the most liquid current asset items included in quick assets, while…

Q: A company concerned about the liquidity of its near-cash securities should invest in U.S. Treasury…

A:

Q: What is a mismatch risk (for an IRS)?  a. The major risk faced by a swap dealer-the risk that a…

A: Mismatch risk occurs when a swap dealer finds it hard to find counterparty for swap . It occurs when…

Q: ndicate whether each statement is true or false. a) A naive hedge is the hedge of a cash asset on a…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: hich of the following is not an advantage of a repurchase agreement (repo) market? a.…

A: A repurchase agreement (repo) is a form of short-term financial support for government mortgage…

Q: Which of the following statements regarding arbitrage is the most correct? A) Any situation in…

A:

Q: A firm decides to sell a pool of receivables to a factor with recourse (i.e. the firm selling the…

A: Receivables are debt owned by the company which is yet to be paid and these are reported in the…

Q: portant topic that usually only economists observe.

A: Basically, risk the executives happens when an investor or fund manager investigates and endeavors…

Q: Many firms use derivative instruments to hedge exposure to changes in the fair value of an asset or…

A: How are you mitigating the risk among the various labels?

Q: Which of the following about Treasuy inflation protected securities is NOT true:

A: A treasury inflation protected security is one which protects the investor from rising inflation.…

Q: is said that market mispricing creates arbitrage opportunities. The other side of the coin is that…

A: arbitrage is buying and selling of securities in different markets.This is short term phenomenon…

Q: of the following is NOT true in swap market participation by the commercial bank? a. Commercial bank…

A: Swap is derivative contracts in which the there are contracts for payment of interest payments of…

Q: Financial intermedires play a crucial role in an economic crisis they are responbile for both…

A: Financial intermediaries are the middle person between the financial market and the investors. They…

Q: Statement I - Exchange rate risk is a factor that contributes to the difficulty of the company to…

A: Credit Period relaxation means extending the credit period given to our customer, it is beneficial…

Q: Riskless, costless arbitrage is the cornerstone of the efficient market hypothesis. However,…

A: Unavoidable Risk: There may be some improbable but significant risks, such as the possibility that…

Q: Why is it important that in an underwriting the investment banker does not overvalue (overprice) or…

A: Companies/Firms appoint investment bankers as underwriters which provide underwriting service and…

Q: Which of the following statements is NOT an explanation of Efficient Market Hypothesis violations?…

A: A market is regarded is inefficient only if: The current price of a security fully reflects all…

Q: 1. According to the efficient market hypothesis (EMH), in a perfect market, the security prices…

A: A flawless, full, costless, and fast transfer of information characterizes an efficient market. In…

Q: According to PFRS 7, it is the risk that the fair value or future cash flows of a financial…

A: Market risk comprises three types of risk: Currency risk Interest rate risk Other price risks

Q: One of the basic promises of security analysis, and in particular fundamental analysis is that A- a…

A: The stock analysis can be done in two forms.  Fundamental analysis.  Technical analysis.

Q: Explain in general terms how various forms of arbitrage can remove any discrepancies in the pricing…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which of the following is/ are the plausible concern (s) related to the impact of algorithmic and…

A: Algorithmic and high-frequency trading refers to the use of computer algorithms for minimizing the…