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18. The seller of subprime loans and other financial derivatives made returns on selling these securities...
4. The subprime mortgage market The financial crisis started with defaults-borrowers not repaying their loans-on subprime mortgages in the United States. Subprime mortgages have which of the followin...
4. The subprime mortgage market The financial crisis started with defaults-borrowers not repaying their loans-on subprime mortgages in the United States. Subprime mortgages have which of the following characteristics? Check all that apply. They have lower overall interest rates than most other mortgages. They are made to people with relatively few assets. They have a higher likelihood of default. Subprime mortgages expanded to about 35% of all mortgages issued in the United States in 2004. which of the following contributed...
Which of the following describes equity securities, rather than debt securities or derivatives? a) They are...
Which of the following describes equity securities, rather than debt securities or derivatives? a) They are best for hedging against changes in currency exchange rates. b) They offer a fixed rate of return. c) They typically generate the highest returns of the three types of marketable securities. d) They carry more risk than debt securities, but less than derivatives. Place the following steps for developing a credit policy in the correct order of process: A: The company decides that it...
Gillcore is about to go public and begin selling securities. As a new public company, what...
Gillcore is about to go public and begin selling securities. As a new public company, what steps must Gillcore take in order to stay in line with the requirements of the Securities Act? a)This company must file a registration statement and prospectus with the SEC. b)The company's obligations depend on what type of company it is and what type of securities it is offering. c)As a new public company it does not need to take any special action.
Consider two securities, one from the Bellville Stock Exchange and the other from the Brackenfell Stock...
Consider two securities, one from the Bellville Stock Exchange and the other from the Brackenfell Stock Exchange (both with normally distributed returns) have same expected rate of return. Suppose the standard deviations of the rates of returns are v1 = .18 and v2 = .24, and that the correlation between the two rates of returns is ρ = .25. Then, calculate the optimal fraction of one’s investment capital that should be used to purchase the security 1 from the Bellville...
12) 12) One contributing factor to the 2007-2009 financial crisis was the structuring of mortgage loans...
12) 12) One contributing factor to the 2007-2009 financial crisis was the structuring of mortgage loans with: A) low initial payments, offset by significantly higher payments later. B) high initial payments, offset by high payments later. C) very short maturities. D) high initial payments, offset by significantly lower payments later.
1.Which one of the following categories of securities had the most volatile annual returns over the...
1.Which one of the following categories of securities had the most volatile annual returns over the period 1926–2016? a ,Long-term corporate bonds b,Large-company stock c,Intermediate-term government bonds d,U.S. Treasury bills e,Small-company stocks 2. Which one of the following statements is correct based on the historical record for the period 1926–2016? a,The standard deviation of returns for small-company stocks was double that of large-company stocks. b,U.S. Treasury bills had a zero standard deviation of returns because they are considered to be...
7. Financial contracts whose values are based on the values of other underlying assets are known...
7. Financial contracts whose values are based on the values of other underlying assets are known as: A. capital market securities B. equities market securities C money market securities D. derivatives market securities 8. The application of psychology to make financial decisions is known as: A. quantitative finance B. behavioral finance C. qualitative finance D. managerial finance 9. Which of the following securities regulations established the Securities and Exchange Commission (SEC)? A. Securities Act of 1934 B. Securities Act of...
All other factors the same, financial instruments with a higher risk will have A) a lower...
All other factors the same, financial instruments with a higher risk will have A) a lower price. B) lower yield (return). C) higher liquidity D) an uncertain price.
Other things equal, when adding new securities to a portfolio, the lower (less positive) the correlation...
Other things equal, when adding new securities to a portfolio, the lower (less positive) the correlation between the new securities and those already in the portfolio, the less the additional portfolio diversification. True False Question 7 (4 points) Consider the following portfolio: Stock Investment Expected Return А $400000 16% B $200000 12% C $800000 18% $300000 16% The expected rate of return for the portfolio is: Your Answer:
Agree or Disagree and Why? Question: overview of financial instruments including but not limited to stocks,...
Agree or Disagree and Why? Question: overview of financial instruments including but not limited to stocks, bonds, and derivative securities – i.e., securities that “derive” their value from other securities (examples include options, futures, swaps, etc.). Emphasis is also placed on the securities markets. How the bond market works. The bond market is where investors go to trade (buy and sell) debt securities, prominently bonds, which may be issued by corporations or governments. It is also known as the debt...
4. The subprime mortgage market The financial crisis started with defaults-borrowers not repaying their loans-on subprime mortgages in the United States. Subprime mortgages have which of the following characteristics? Check all that apply. They have lower overall interest rates than most other mortgages. They are made to people with relatively few assets. They have a higher likelihood of default. Subprime mortgages expanded to about 35% of all mortgages issued in the United States in 2004. which of the following contributed...
12) 12) One contributing factor to the 2007-2009 financial crisis was the structuring of mortgage loans with: A) low initial payments, offset by significantly higher payments later. B) high initial payments, offset by high payments later. C) very short maturities. D) high initial payments, offset by significantly lower payments later.
7. Financial contracts whose values are based on the values of other underlying assets are known as: A. capital market securities B. equities market securities C money market securities D. derivatives market securities 8. The application of psychology to make financial decisions is known as: A. quantitative finance B. behavioral finance C. qualitative finance D. managerial finance 9. Which of the following securities regulations established the Securities and Exchange Commission (SEC)? A. Securities Act of 1934 B. Securities Act of...
Other things equal, when adding new securities to a portfolio, the lower (less positive) the correlation between the new securities and those already in the portfolio, the less the additional portfolio diversification. True False Question 7 (4 points) Consider the following portfolio: Stock Investment Expected Return А $400000 16% B $200000 12% C $800000 18% $300000 16% The expected rate of return for the portfolio is: Your Answer:
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