A risk which offers the prospects of either a loss or gain only ,may be described as?
Q: If a $900,000 30-year fully amortizing fixed rate mortgage loan from City National Bank has an…
A: Amortization in the context of a fixed-rate mortgage loan refers to the process of gradually paying…
Q: A property investor bought a restored 26-unit apartment building in Truckee, Nevada in 2018 for…
A: The scenario described involves a property investor who purchased a 26-unit apartment building in…
Q: Three college friends decided to buy a “fixer-upper” apartment building in Modesto, California after…
A: the answer is: c. 9.99%. Explanation:Step 1:Given:Loan Option A (Bank of the West):Down Payment:…
Q: Discuss the differences between retaining and transferring risk. In what instances would you decided…
A: We would discuss on the differences between retaining and transferring risk. Also we would discuss…
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A: DISCLAIMER “Since you have asked multiple questions, we will solve the first question for you. If…
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A: Risk management is the continuous process of identifying, assessing, and controlling potential…
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Q: Define the following terms related to risk: • Risk avoidance • Risk reduction • Risk transfer •…
A: Risk avoidance refers to the practice of completely eliminating a particular risk or avoiding any…
Q: Below are four categories of risk and ways that a company is currently handling the risks. Which…
A: a) Risk Transference: This includes the treatment of danger to an outsider. For this situation the…
Q: Calculate the present value of a $1,000 zero-coupon bond with six years to maturity if the yield to…
A: Formula, Present value = Future value / (1+YTM)^n
Q: The Parable of the Green A new housing development has lots of packed earth and weeds but no…
A: For this situation, there was no comprehension of what must be estimated. A business or an…
Q: Describe what you would expect to find in a risk characterization.
A: ANSWER: The results are communicated to the risk manager with the help of overall assessment on…
Q: explain increasing awerrness of risk and give examples
A: The process of identifying and comprehending the potential risks and hazards present in a specific…
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A: Why might a manager intentionally classify a trading security as an available-for-sale security?…
Q: A new housing development has lots of packed earth and weeds, but no grass. Two neighbors make a…
A: Business Communication is an aspect of the organization that deals with the sharing of information…
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A: Macaulay convexity is a financial concept that measures the sensitivity of the price of a bond to…
Q: If the contract annual interest rate on a $2,880,000 fixed rate loan that is fully amortizing over…
A: The correct answer is:d. 6.49%Explanation:We must compute the present value of the loan amount after…
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Q: Why do we need to manage risk? Explain Briefly
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A: The correct answer to the question is: b.$1,287.36Explanation:Step 1: Calculate the Loan…
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A: Payoff refers to a positive outcome or results produced from the successful decisions and actions…
Q: risk management approaches except
A: The correct answer is risk avoidance.
Q: Anna bought a bond with a par value of $10,000 and a coupon rate of 8% at par. After a year, she was…
A: The annual income (interest or dividends) from an investment is divided by the security's current…
A risk which offers the prospects of either a loss or gain only ,may be described as?
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- Discuss the differences between retaining and transferring risk. In what instances would you decided to retain risk? How would you do so?Calculate the present value of a $1,000 zero-coupon bond with six years to maturity if the yield to maturity is 7%.A new housing development has lots of packed earth and weeds, but no grass. Two neighbors make a wager on who will be the first to have a lush lawn. Mr. Furious knows that a lawn will not grow without grass seed, so he immediately buys the most expensive seed he can find because everyone knows that quality improves with price. Besides, he will recover the cost of the seed through his wager. Next, he stands knee deep in his weeds and tosses the seed around his yard. Confident that he has a headstart on his neighbor, who is not making much visible progress, he begins his next project. Ms. Slo N. Steady, having grown up in the country, proceeds to clear the lot, till the soil, and even alter the slope of the terrain to provide better drainage. She checks the soil’s pH, applies weed killer and fertilizer, and then distributes the grass seed evenly with a spreader. She applies a mulch cover and waters the lawn appropriately. She finishes several days after her neighbor, who asks if she…
- Calculate the Macaulay convexity of a 10-year 6.9% $1000 bond having annual coupons and a redemption of $1,200.00 if the yield to maturity is 6.7%If the contract annual interest rate on a $2,880,000 fixed rate loan that is fully amortizing over 20 years with equal monthly payments is 6.25%, what is the effective yield to the lender if the lender charges 1.5% as an origination fee, $288 for a credit report and $3,080 for an appraisal fee and the loan is repaid after ten years? a. 6.25% b. 6.51% c. 6.46% d. 6.49%Define the following terms related to risk: • Risk avoidance • Risk reduction • Risk transfer • Risk retention
- Consider a firm with a contract to sell anasset for $115,000 three years from now. The asset costs $76,000 to produce today.Given a relevant discount rate on this asset of 13 percent per year, will the firm makea profit on this asset? At what rate does the firm just break even?The Parable of the Green A new housing development has lots of packed earth and weeds but no grass. Two neighbors make a wager on who will be the first to have a lush lawn. Mr. F knows that a lawn will not grow without grass seed, so he immediately buys the most expensive seed he can find because everyone knows that quality improves with price. Besides, he’ll recover the cost of the seed through his wager. Next, he stands knee-deep in his weeds and tosses the seed around his yard. Confident that he has a head start on his neighbor, who is not making much visible progress, he begins his next project. Ms. Slo Steady, having grown up in the country, proceeds to clear the lot, till the soil, and even alter the slope of the terrain to provide better drainage. She checks the soil’s pH, applies weed killer and fertilizer, and then distributes the grass seed evenly with a spreader. She applies a mulch cover and waters the lawn appropriately. She finishes several days after her neighbor, who…By the use of relevant examples, differentiate between the following:a. Hazard based risk and Uncertainty based risk. (4 marks)b. Risk and uncertainty. (4 marks)c. Internal risk and external risk.
- A property investor bought a restored 26-unit apartment building in Truckee, Nevada in 2018 for $6,000,000 with a 75% LTV fixed rate fully amortizing first mortgage loan that had a five year lockout on prepayment. By 2022, the apartment building had increased in value to almost $10,000,000 due to the continuing growth in the local economy and falling cap rates. Because of the prepayment lockout, the investor could not refinance the first mortgage loan, so she instead found a lender who would place a $3,000,000 second mortgage loan on the property. The interest rate charged by the second mortgage lender would likely be: a. Unrelated to the risk of the second mortgage loan b. Higher than the rate on the underlying first mortgage loan c. Lower than the rate on the underlying first mortgage loan d. The same as the rate on the underlying first mortgage loanSince a risk is something that has yet to happen--and may never happen--how much time and effort should be spent planning and preparing for it?You're working with a buyer who wants to make an offer on a house. You check the Flood Insurance Rate Maps and see that the property is located in a V Zone. What should you tell the buyer? This coastal property is not considered a high- risk category on the FIRM maps, so insurance is not required. The property is in a special flood hazard area, and flood insurance will be required if the buyer intends to use a federally insured or regulated lender. The property is in a 100-year flood plain, so flood insurance is encouraged but not required by lenders. The property is considered to be very valuable and is likely to increase in value in the near future.
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