You observe an upward slopping yield curve. Assuming that expectation hypothesis of the yield curve holds: FRA 1x4 and FRA 3x6 rates are higher than the spot 3M interest rate.
Which of the following is true: Liquidity preference theory cannot explain inverted yield curve
A bank collects mostly short-term retail deposits (up to 9 months) and assets comprise mainly of fixed interest rate corporate loans with average maturity of 3 years. What risk is the bank exposed to and how it could hedge it: Risk of increase in interest rates, the bank could enter IRS where it will pays fixed.
You are investing your money in two different stocks. Which of the following is TRUE? Portfolio risk can be lower than the risk of each of the stocks separately.
Structural subordination suggest that: It is safer to lend to at the operating subsidiary level than at the holding level
Bond yield: Is equal to the IRR of an investor who buys the bond now and holds until maturity
Which of the following is not a feature of private equity market: Private equity companies are usually listed at the stock exchange.
If you have bought EUR on the forward market in order to make speculative profit it means that: you expect that EUR will be stronger at the expiry date than the market currently expects
What is proposed to neutralize the different pace of structural reforms in euro-zone countries: progress toward a political union
In 1992, Bank of England stopped to defend the pound, because: the large scale of BoE interventions produced the risk of inflationary pressure in Germany
Why were Special Purpose Vehicles called “shadow banks”: they were buying debt
What enabled a sharp fall of CDO prices? Illiquidity of CDO market
Which sentence is TRUE in the efficient market (in strong sense): investing in index is an efficient strategy
Which institutions pass the risk on their customers: hedge funds
You bought S&P futures and paid 10% as margin deposit. The minimum deposit (minimum money required) is 5%. If you do not add money to your deposit, your positions will be closed, when S&P drops by: 10%
Pre-settlement risk means: loss of off-balanced profits on the date of insolvency announcement
Forward exchange rate is dependent on: spot rate and interest rates referring to fore and counter currency
FX Swap is an instrument: opening mostly interest rate risk
FX Option is an instrument: insensitive to volatility changes
Short option exposure means: gains on stabilizing markets
2) Which of the given features does not refer to the derivatives? are balance instruments
4) Forward rate is dependent on: spot rate and interest rates referring to fore and counter currency
6) Long option exposure means: gains if volatility goes up
7) On the emerging market currency crisis means: volatility rise and yield decrease
8) What is true about the entrepreneur who introduces it’s company onto the stock exchange?
Entering stock exchange can help the company raise capital for further expansion.
9 in which market the investor can make extraordinary return by analyzing historical price movements
In none of the above
10) You are investing your money in 2 different stocks. Which of the following is FALSE?
Expected return depends on the price correlation between the stocks
11) Negative pledge is:
A covenant preventing the Borrower to establish new security
12) Foreign bonds are:
bonds issues in a given country by a foreign company
13) Treasury bond in your portfolio has the nominal of 100€, and the remaining maturity of 5years. It pays coupon of 4% coupon. Current YTM (yield to maturity) for this bond is 3%. This means:
The current price of this bond is higher than 100€.
14) You buy FRAU 3x9 at 5%. This means you will make money if:
6 months interest rates in 3 month time are higher than 5%.
15 A year ago the company has taken a 5 year loan and pays WIBOR + 150bp. Now the company wants to change it to fix rate loan using IRS for the remaining 4 year of the loan. What is the effective rate for the company, if market maker quotes 4 year IRS at 4,2%-4,3%, and 5 year at 4,4%-4,5%. The company pays effectively an interest of (4,3%+1,5%)=5,8%
16 Which of the following features does not refer to structured investment products:
Access to wholesale markets for retail clients
17) What were the consequences of capital flows liberalization in 1980s? exchange rate fluctuations became more dependent on capital flows
19 The negative feedback loophole between a fall in real interest rate and credit boom eroded competitive position of: Spain