Module 6 Short Paper - Qualcomm

Which of the following is an example of diversifiable risk? a) Interest rates rising b) A stock market crash c) A company's CEO being arrested for fraud d) A terrorist event like 9/11

Apart from risk components, several macroeconomic factors-such as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activity-influence interest rates. Based on your understanding of the impact of macroeconomic factors, identify which of the following statements are true or false: Statements When the Fed increases the money supply, short-term interest rates tend to decline. When the economy is weakening, the Fed is likely to increase short-term interest rates. During the credit crisis of 2008, investors around the world were fearful about the collapse of real estate markets, shaky stock markets, and illiquidity of several securities in the United States and several other nations. The demand for US Treasury bonds increased, which led to a rise in their price and a decline in their yields. When the economy is weakening, the Fed is likely to decrease short-term interest rates. True False

Which of the following is an example of unsystematic risk? XYZ corp stock price fell when the news of a drop in GDP was released.  When the new employment numbers showed the economy is creating more jobs, the stock market rose.  ABC Manufacturing stock price falls upon the announcement that they have a parts shortage from their suppliers When news of strong consumer demand was released, proctor and gamble stock price rose The stock market rose at the announcement of higher GDP numbers

Which of the following is most true?   The nominal rate of a government long-term security can be used as a proxy for the real risk free rate.   A direct relationship is exhibited between the investors’ willingness to supply funds and the interest rates of securities.   Finance managers tend to favor more on long-term financing if the nation’s Gross Domestic Product is expected to contract.   Maturity risk premium is always included in the nominal rate of any corporate security since corporations are perceived as less riskier than government.

Apart from risk components, several macroeconomic factors—such as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activity—influence interest rates. Based on your understanding of the impact of macroeconomic factors, identify which of the following statements are true or false: Statements True False Countries with strong balance sheets and declining budget deficits tend to have lower interest rates.       When the economy is weakening, the Fed is likely to increase short-term interest rates.       Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates.       The Federal Reserve Board has a significant influence over the level of economic activity, inflation, interest rates in the United States.

Choose Correct word in Bold Suppose you are an investor who owns shares of Facebook stock. If the Fed implements a stimulative monetary policy, then interest rates will (increase/decrease). If, as a result of the policy implementation, you believe that the economic conditions are much worse than anyone is anticipating, and that sales and earnings for Facebook could decrease significantly in the near future, then you believe that the value of the stocks will (increase/decrease), and as a result, your shares of Facebook stock would (increase/decrease) in value.

Interest rate risk is of concern to a​ firm's financial​ officer, because  ​(Select the best choice​ below.)     A. it is more difficult to issue securities when interest rates are low.   B. changes in interest rates affect the expected return of financial instruments.   C. federal government taxation increases as interest rates​ rise, reducing the cash available to the firm.   D. inflationary periods may reduce the real earnings of the firm.   E. B and D

What is the risk profile of those company? (How much overall risk is there inthis firm? Where is this risk coming from (market, firm, industry or currency)?How is the risk profile changing? The company is1) Berjaya Corporation Berhad 2) BSL Corporation Berhad

According to PFRS 7, it is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. Interest rate risk                           Currency risk                      Credit risk Other price risk

Recession, inflation, and high interest rates are economic events that are best characterized as being a. company-specific risk factors that can be diversified away. b. among the factors that are responsible for market risk. c. risks that are beyond the control of investors and thus should not be considered by security analysts or portfolio managers. d. irrelevant except to governmental authorities like the Federal Reserve. e. systematic risk factors that can be diversified away.

Which type of event started the financial crisis in 2007-2009?   A. Stock market crash   B. Foreign exchange devaluation   C. Increase in uncertainty after failure of a major institution   D. Credit boom and bust

Value at Risk (VaR) is a statistical measure of maximum loss used by banks and other financial institutions to manage risk exposures. True or False

Which of the following statements is false?   A.   Basel II use the value at risk (VaR) with a one-year time horizon and a 99.9% confidence level for calculating capital for credit risk and operational risk.   B.   20 BP = 0.2%   C.   Basel I is increasing the amount of capital that banks are required to hold and the proportion of that capital that must be equity.   D.   Model-building approach is a model for the joint distribution of changes in market variables and using historical data to estimate the model parameters.

Finance Political stability is a major factor of which one of the following? business risk inflation risk country risk exchange rate risk    2. Regarding short selling: which one of the following statements is incorrect? Dividends on any stock sold short must be covered by the short seller. There is no time limit on a short sale. Short sales are permitted only on falling prices or a downtick. Short sellers must put up margin as if they had gone long.

To weaken the dollar using sterilized intervention, the Fed would ____ dollars and simultaneously ____ Treasury securities. A. buy; sell B. sell; sell C. sell; buy D. buy; buy