D3) (multiple answers) Choose all correct answers.O Using backtesting with ex-post comparison can monitor the quality of the value at risk model.O Forward contracts are a standardized contracts so trade on stock exchanges.O Fixed-rate assets and liability would not affect the Gap analysis (Gap-RSA-RSL).D A higher default rate would cause a lower price of the loan.

Financial institutions A financial institution refers to the company that is involved in the dealing…

Answered: (multiple answers) Choose all correct…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 4P

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Which of the following is incorrect regarding margin trading? O a. The relationship between security prices and the new margin is positive. O b. It can be applied to bond trading. O c. An account is restricted when the equity is less than the maintenance margin. O d. The lower the amount of equity, the greater the loss when prices fall.
All of the following statements about an efficient market are correct EXCEPT: a. All financial transactions have an NPV of equal to zero b. A skilled individual may have sustainable above market returns c. The investor is compensated properly for risk borne d. The investor does not receive abnormal returns consistently
Banks use gap analysis to measure interest rate risk in their balance sheets. If firm XYZ is said to have a positive gap, this means: Group of answer choices C. Rate-sensitive assets exceed rate-sensitive liabilities B. Long-term assets are funded with short-term liabilities D. Rate-sensitive assets equal rate-sensitive liabilities A. Liabilities reprice before assets
Please choose an answer from the following options: 1: Asset B 2: Asset C 3: All of the assets are correctly priced 4: Asset A
Which of the following is TRUE about liquidity? a. All assets should be put in liquid asset so that it is easy to use when necessary b. In most of the cases, the more liquid asset provides the lower return c. Investors should not care about liquidity in order to have a balanced portfolio investment d. Liquidity requirement does not have any impact on the return.
According to Capital Asset Pricing theory (CAPM), in a competitive marketplace: Group of answer choices A. only systematic risk is rewarded. B. only diversifiable risk is rewarded. C. all types of risks are rewarded. D. no risk is rewarded.
Evaluate the following statement: If the financial market is frictionless and complete, the asset with higher expected return also exhibits higher return volatility (i.e., standard deviation of returns).
. 1. In general, financial assets that have a(n) higher; higher lower; higher higher; lower equal; higher 2. The more liquid markets are the: lower the interest rates, and the lower the amount of investment. higher the interest rates, and the higher the amount of investment. lower the interest rates, and the higher the amount of investment. higher the interest rates, and the lower the amount of investment. 3. When purchasing a future contract, the buyer of a futures contract: • agrees to pay the seller later where the payment is based on the future price of some asset. assumes very little risk of the future price fluctuation of some asset. must pay a set amount to the seller regardless of what the future price turns out to be. none of these are true. 4. Those who believe that market prices always incorporate all available information believe: in the efficient-market hypothesis. • that randomly choosing a stock is not as effective as technical or fundamental analysis. that current stock…
Equity price risk is the risk that arises from security price Choose. - the risk of a Choose.. v in the value of a Choose... v or a portfolio. Equity price risk can be either systematic or Choose. v risk. In a global economic crisis, equity price risk is Choose.. because it affects multiple assets Choose. volatility decline classes. increase specific systematic security
Which of the following statements is false? A. A short sale allows investors to generate additional profits from a decline in a security’s price. B. One of underlying assumptions of technical analysis is that supply and demand are driven by both rational andirrational investor behavior. C. Investors get a margin call if the equity in a margin account rises above the required maintenance level. D. Technical analysis cannot modify price manipulations.
1) Please indicate whether the following statements are true or false. In case of a false statement, briefly specify why the statement is false. 1. A real asset is different from a financial asset because a real asset must take a physical form. 2. In the financial market, an investor buys financial securities from dealers at the ask price and sells financial securities to dealers at the bid price. 3. Mankowitz portfolio theory assumes average investors have a utility function as an increasing and concave function of future portfolio return. 4. According to CAPM, all well-diversified portfolios on the capital market line have the same Sharpe ratio. 5. The Markowitz portfolio theory assumes that investors hold homogenous expectations about risk and returns of financial securities.
2

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