Calculate the basis point value, or PV01, of a bond with a modified duration of 5 and a price of $102.
What kind of a risk attitude does a utility function with an upward sloping curvature indicate?
When considering an appropriate mix of debt and equity, Chief Financial Officers generally consider:
I. Tax advantage of debt
II. Financial distress costs
III. Agency costs of equity
IV. Retaining financial flexibility
Credit derivatives can be used for:
I. Reducing credit exposures
II. Reducing interest rate risks
III. Earn credit risk premiums
IV. Get market exposure without taking cash market positions
Which of the following statements are true:
I. Cash markets tend to be more liquid than derivative markets
II. A higher credit risk is associated with lower liquidity in times of crises
III. A higher bid-ask spread indicates greater liquidity when compared to a lower bid-ask spread
IV. A higher normal market size indicates greater liquidity than a lower market size
An investor has a bullish outlook on the market. Which of the following option strategies would suit him?
I. Risk reversal
II. Collar
III. Bull spread
IV. Butterfly spread