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Determine the discounted payback period (in years) for a project that costs $1,000 and would yield after-tax cash flows of $525 the first year, $485 the second year, $445 the third year.
Why are more funds from property and casualty insurance companies than funds from life insurance companies invested in the money markets?
The annualized asset volatility is 10%. According to the KMV model, what are the default point and the distance to default at time 1?
A bank computes the distribution of its loan portfolio marked-to-market value one year from now using the Credit Metrics approach of computing values for rating transition outcomes using
Assume that the one-year probability of default is 4%, the recovery rate is 60%, and defaults are uncorrelated over the years. What is the two-year cumulative expected credit loss on Mr. Rosenquist'
Which of the following ratios usually reflects investors opinions of the future prospects for the firm?
A bank is considering buying (i.e., selling protection on) an AAA-rated super senior tranche [10% - 11%] of a synthetic collateralized debt obligation (CDO) referencing an investment-grade portfolio
Which of the following is not an item added back to income in the operations section of the statement of cash flows when using the indirect presentation?
Mary Ott Hotels wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans:
You buy an 8% coupon, 20-year maturity bond when its yield to maturity is 9%. A year later, the yield to maturity is 10%, What is your rate of return over the year?
What are some of the reasons behind that, and what corrective action can management take to ensure performance within industry norms?
Julie Stansfield has a bicycle rental shop with annual revenues of $200,000. What should be Julie's net income?
One-year Treasury bills currently earn 3.45 percent. If the unbiased expectations theory is correct, what should the current rate be on two-year Treasury securities?
A 7.50 percent corporate coupon bond is callable in 10 years for a call premium of 1 year of coupon payments. Assuming a par value of $1,000, what is the price paid to the bondholder if the issue
It measures firm-wide VAR by adding up the VARs for market risk, operational risk, and credit risk. There is a risk that the bank has too little capital because
Which of the following variables is nota primary driver of the diversification benefit that accrues from aggregation?
Thereafter, you expect dividends to grow at the rate of 6% a year in perpetuity. If you require a return of 12% on your investment, how much should you be prepared to pay for the stock?
A mutual fund investing in common stocks has adopted a liquidity risk measure limiting each of its holdings to a maximum of 30% of its 30-day average value traded. If the fund size is USD 3 billion,
"Its competition for information that makes securities markets efficient." Is this statement correct? Explain.
A corporation has $6,000,000 of 10% bonds and $4,000,000 of 12% preferred stock outstanding. The firm's financial breakeven ( assuming a 40% tax rate) is?
Find the future values of the following ordinary annuities: FV of $800 paid each 6 months for 5 years at a nominal rate of 8%, compounded semiannually.
Your parents will retire in 23 years. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?
The following statements compare a highly liquid asset against an (otherwise similar) illiquid asset. Which statement is most likely to be false?
Which of the following approaches for calculating operational risk capital charges leads to a higher capital charge for a given accounting income as risk increases?
Which of the following statements about its methodology for calculating an operational risk capital charge in Basel II is correct?