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Avanti Corporation had beginning inventory $50,000, cost of goods purchased $350,000, and ending inventory $100,000. What was Avanti's inventory turnover?
Sylvia, a portfolio manager, established a Yankee bond portfolio. However, she wants to hedge the credit and interest rate risk of her portfolio. Which of the following derivatives will best fit Syl
The recovery rate for each in the event of default is 50%. For simplicity, assume that each bond will default only at the end of a coupon period. The market-implied risk-neutral probability of defau
What type of ratios best measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash?
Which of the following 10-year swaps has the highest potential credit exposure?
BNP Paribas has just entered into a plain-vanilla interest-rate swap as a pay-fixed counterparty. Credit Agricole is the receive-fixed counterparty in the same swap. The forward spot curve is upward
What is Du Pont Analysis of Financial Statements? What is Du Pont Chart? Explain the various components of return on equity with the help of Du Pont Chart.
Which of the following will have the greatest potential credit exposure?
Ignoring settlement risk and assuming option premiums are paid immediately at the time of the transaction, which of these strategies will notgive rise to increased credit exposure to Ford?
Return on Capital Employed measures: (i) Activity; (ii) Profitability; (iii) Liquidity; (iv) Long-term financial position of the business.
Among the following variables, which one is the main driver of the probability of default in the KMV model?
To what sort of option on the counter party's assets can the current exposure of a credit-risky position better be compared?
Assuming the loss given default rate for the underlying credit is 60%, what is, approximately, the implied default probability for this bond?
Silva Corporation reported net sales of $200,000, $350,000, and $450,000 in the years 2013, 2014, and 2015 respectively. If 2013 is the base year, what is the trend percentage for 2015?
In the context of evaluating sovereign risk, which of the following statements is incorrect?
The recovery rate on credit instruments is defined as one minus the loss rate. The loss rate can be significantly influenced by the volatility of the value of a firm's assets before default. All oth
You are considering an investment in one of three different bonds. Your investment guidelines require that any bond you invest in carry an investment grade rating from at least two recognized bond r
The forward contract has a fair value of $1,250. What is the net increase or decrease in cash flow from having entered into this forward contract hedge?
How does the fluctuation in exchange rates affect Rabato's 2011 income statement? How does the fluctuation in exchange rates affect Rabato's 2012 income statement?
A portfolio of bonds consists of five bonds whose default correlation is zero. The one-year probabilities of default of the bonds are: 1%, 2%, 5%, 10%, and 15%. What is the one-year probability of n
The probability of joint default of the two bonds is 1.27%, and the default correlation is 30%. The bond value, default probability, and recovery rate are USD 1,000,000, 3%, and 60% for one bond, an
Consolidated statements are to be produced, and the current exchange rate is $0.19 = 1 peso. Which of the following statements is true for the consolidated financial statements?
As the CRO of a firm specializing in MBSs, you have been asked to explain how interest-only (IO) strips and principal-only (PO) strips would react if interest rates change. Which of the following is
George Smith is an analyst in the risk management department and he is reviewing a pool of mortgages. Prepayment risk introduces complexity to the valuation of mortgages. Which of the following fact
If the recovery value for A-rated bonds in the event of default is 70% and the recovery value for BBB-rated bonds is 45%, what is the one-year expected credit loss from this portfolio?