Financial futures are available to protect against all of the following except: a., interest rate risk, b., level of equity prices, c., currency swap risk, d., exchange rate risk?
c., currency swap risk,( Forwards are used to hedge currency
swap risk)
Futures can manage interest rate risk, share price and exchange
rate risk. Futures are used to hedge securities and commodities and
interest rates
Financial futures are available to protect against all of the following except: a., interest rate risk,...
1) The currency futures markets have a long history and are ______________ due to their information driven nature. Select one: a. heavily regulated by the U.S. federal government b. extremely volatile c. extremely complicated d. not volatile 2) Which one of the following is NOT a disadvantage when using currency futures? Select one: a. low initial payment to purchase the contract b. limited number of currencies available in futures c. fixed contract sizes by currency d. limited number of expiration...
identify some of the financial practices that a construction company can take to protect itself against interest rate risk, in particular. What are examples of recommended practices that construction firms can use to manage the risks associated with interest rate-related risks, and which strategies do you recommend?
Which of the following risk is not a determinant of interest rate in mortgage lending? a. Default risk b. Liquidity risk c. Currency exchange risk d. Interest rate risk.
What are some financial practices that a construction company can take to protect themselves against interest rate risk? Which do you think are the best strategies? Why?
An institution that suffers from declining interest rates may hedge by _____. A. selling interest rate futures B. buying interest rate futures C. making fixed-rate payments in exchange for floating-rate payments in an interest rate swap D. making floating-rate payments in exchange for fixed-rate payments in an interest rate swap E. both (B) and (D)
Types of exchange rate risk include all of the following, except:
All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both borrowers and investors because of diminishing investment prospects and increased cost of borrowing; II. Failure to pay accounts receivable on time by customers may have a significant negative impact on the capital base of a company; III. Companies involved in cross-border trades are subject to FX risks: IV. It is essential for banks to assess the creditworthiness of customers to mitigate...
Which of the following types of “risk” are encountered in financial markets? Interest rate risk: Higher interest rate risks impair the value of fixed income securities (such as bonds). Credit risk: Risk of possible default, where the borrower cannot make timely interest payments and/or principal repayments. Inflation risk: Purchasing power is impeded by a general increase in the price of goods and services. Reinvestment risk: Inability to reinvest coupons that have been paid to you at a similar investment yield...
Which of the following is considered a part of financial risk? Selected Answer: Answers: A. Demand variability B. Sales price variability C. The extent to which operating costs are fixed D. Changes in interest rates on debt E. The ability to change prices as costs change Which of the following is an example of business risk? Selected Answer: D. Currency risk Answers: A. Default risk B. Prepayment risk C. Strategic risk D. Currency risk E. Equity risk Which of the...
Financial risk forms : • Market value risk • interest rate risk, • exchange prices, • Asset prices price • default risk • Risk of liquidity Non-Financial risk forms: • Business Risk( chances of failure of business) • Operational Risk (misconduct,fraud etc) • Accounting risk (changes in GAAP/IFRS and comparability issues, managed earnings, etc.) • Legal and Regulation risk • Tax risk • environment risk • Strategic risk Elaborate on each of the risk factors with examples