When there is a forward premium, what condition must be true (in CIP or UIP)? Explain how that condition leads to a forward premium.

Q: The claims issued by the DSU are called premiums. It is true or false?

A: Answer: false

Q: What is meant by a convertible’s floor value?

A: Convertible floor is defined as the lowest worth of a particular bond, typically a convertible bond,…

Q: What the different between rate interest و interest value ؟؟!!

A: The rate interest indicates the cost of borrowing or earnings on deposit in the percentage of the…

Q: Explain the logic of the liquidity premium theory of the term structure

A: Investors prefer to have the securities which are highly liquid and have short term maturity period…

Q: Interest rate parity; purchasing power parity

A: Both defined in next step

Q: What is meant by actuarially fair prices? What conditions will make Arrow-Debreu prices actuarially…

A: Fairtrade Minimum Price is defined as the minimum price, which used to get paid through the…

Q: Identify the MARR (or external interest rate)?

A: A minimum acceptable rate of return (MARR) is the all-out advantage that a speculator wants to pick…

Q: What is the difference between spot rates andforward rates? When is the forward rate at a premium to…

A: Spot rates are the rates that prevail in the cash market or the rates that are applicable today.…

Q: Define the term premium?

A: Premium in finance has several definitions, with the initiative being the overall cost of purchasing…

Q: Share option compensation is what accounting subject?

A: Stock-based compensation: It is a way of paying employees, executives, and directors of a company…

Q: Please explain the difference between the terms interest rate and required return by defining each.

A: The amount which is charged by the lender to the borrower in order the use assets is known as the…

Q: What is interest rate parity?

A: Interest rate parity: Interest rate parity is a theory concerning the association among spot…

Q: explain whether true or false : The interest rate parity does hold in realty

A: Interest rate parity is an releationship between spot exchange rate and the forward exchane rate…

Q: Define Risk Premium

A: It is defined as the distinction between the expected return for a portfolio or an investment and…

Q: Which of the following may be measured subsequently at amortized cost? Group of answer choices A…

A: Amortized cost  Amortized cost is referred to as accumulated portion of the cost recorded of fixed…

Q: What is liquidity premium (LP)?

A: Answer: Interest rate theory on liquidity premium is a significant concept in bond investment. It…

Q: Explain Risk Premiums, Interest Rate Risk, and Default Risk?

A: Risk premium: A risk premium is nothing but the return above the risk-free rate of return that an…

Q: What is Inflation Premium?

A: Inflation premium: An inflation premium is the piece of the common interest rate coming about…

Q: Describe the process of using the risk-adjusted discount rateto calculate the net present value?

A: Net present value (NPV) is the excess of present value of cash inflows over the present value of…

Q: The Contract rate is also known as the coupon or stated rate that is identified in the indenture…

A:

Q: What happens when you want your policy to be a paid-up policy. Show this clearly by giving an…

A: Additional whole life insurance coverage obtained with dividends rather than premiums from a policy…

Q: What is the indifference point under the net present value? When would there be a discount on a…

A: SOLUTION- NET PRESENT VALUE = PRESENT VALUE OF CASH INFLOW - PRESENT VALUE OF CASH OUTFLOW.

Q: When the fair value of plan assets is multiplied with a discount rate, an interest expense arise.…

A: There is mainly two types of accounts which are kept in the defined benefit plan.  One is Defined…

Q: The contractual interest rate is alway state as a

A: Contractual Interest Rate Contractual interest rate refer as the rate which helps to determine the…

Q: What do we mean by covered interest arbitrage parity? Explain in detail by a diagram.

A: Covered interest arbitrage: It is relationship between forward premium and interest rates. If…

Q: b. identify whether positive or negative premium cidentify break-even point

A: From the given graph, we can observe: Option = Long Put (Mentioned) Strike price = $40…

Q: Amortization of premium decreases from period to period? True or False?

A: Bond is a debt security which carries a fixed interest rate. The fixed interest rate is known as…

Q: Which of the following may be measured subsequently at amortized cost? a. A derivative b. A…

A: Solution: A derivative and non derivative equity instruments are held for trading and measured at…

Q: Define each of the following terms:l. Interest rate risk; maturity risk premium (MRP); reinvestment…

A: Interest rate risk: Interest rate risk is the chance of a decay in the worth of an asset resultant…

Q: What amount should be credited to Share Premium?

A: Computation of fair value of Net identifiable assets Particulars Amount Current Assets…

Q: Is a cap rate the same as an IRR? Which is generally greater? Why?

A: The capitalization rate or cap rate cant be considered as similar to the IRR or the internal rate of…

Q: What is inflation premium (IP)?

A: Inflation premium is considered to be a very popular concept as this is considered to be a major…

Q: Please define the “Interest Rate Parity Theorem” and explain the equation which describes it.

A: An interest rate parity theory is defined as an interest rate differential, which is between the two…

Q: When there is a forward premium, what condition must be true (in CIP or UIP)? Explain how that…

A: CIP maintains in reality. Indeed, CIP refers to how financial institutions that offer advanced…

Q: Which of the following may be measured subsequently at amortized cost? A. non-derivative debt…

A: Solution: "Non-derivative debt instrument" may be measured subsequently at amortized cost.

Q: 1. A fixed amount added to the premium of a given poli regardless of policy size is known as O hl no…

A: A policy fee is a one time charge which is added to the premium and does not get affected by the…

Q: takaful premiums are?

A: Takaful insurance is an Islamic insurance in which Group members contribute money to mitigate the…

Q: What is premium on forward rate?

A: A forward rate is referred as an interest rate which is applicable on financial transactions which…

Q: "Fisher effect defines the relationship between nominal rates, real rates, infiation, default…

A: Fischer effect:- It is an important concept of economics that describes the releationship between…