Credit default swap - Study guides, Class notes & Summaries

Assessment Mutual Insurer - Has the right to assess policyowners an additional amount if the insurer's financial operations are unfavorable Retention - Firms retain part or all of the losses that can result from a given loss; Ex: Expense, set aside liquid, credit line Risk - Uncertainty about chance, timing, or amount of loss Chance of Loss - Probability that an event will occur Objective Risk - The relative variation of actual loss from expected loss; (ActualExpected)/Expected; higher va...

Wall Street Prep 2023-2024 Exam Questions and Answers All Correct What is a Mortgage Backed Security? - ANSWER a security that pays its holder a periodic payment based on the cash flows from the underlying mortgages that fund the security What is a Collateralized Debt Obligation? - ANSWER a type of security that pools together a number of interest paying assets and pays "coupon payments" based on those assets future cash flows (include MBS's) Why would a company li...

Swaps - Introduction Questions & Answers 2024. On each payment date, the fixed rate receiver must typically pay an amount equal to: a. The product of the floating rate and the nominal principal b. The product of the nominal principal and the difference between the floating and fixed rate c. The nominal amount plus the product of the floating rate and the nominal principal - correct answer B. Payments on a swap are netted off against one another. Therefore the difference between the fixed and...

CFA Level 1 - 101 Must Knows 368 Questions with Verified Answers Addition Rule of Probability - CORRECT ANSWER ADDITION: P(A or B) = P(A) + P(B) - P(AB) Roy's Safety First Criterion - CORRECT ANSWER Safety First Ratio = (E(R) - Rₜ) / σ Larger ratio is better If (Rₜ) is risk free rate, then it becomes Sharpe Ratio Sharpe Ratio - CORRECT ANSWER Sharpe Ratio = (E(R) - RFR) / σ Larger ratio is better If (Rt) is higher than RFR, then it becomes Safety First Ratio Centra...

What is a Mortgage Backed Security - Answer-People in need of loans go to commercial bank for money/loan; commercial bank sells loans to IB for amount loaned out in return for rights of interest payments on loans; IB creates separate entity and issues shares (MBS) at a certain price to make a margin on their original payment to the commercial bank What is a Collateralized Debt Obligation (CDO) - Answer-IBs split mortgages into tranches (senior, mezzanine, equity) from least risky to most ri...

A particular mortgage pool has a balance of $65 million and is scheduled to receive $108 thousand of planned principal payments in a month. If the CPR is 10%, the number of dollars of prepayments in that month is closest to: A. $568,205 B. $10,800 C. $567,261 D. $650,000 - ANS C. $567,261 Which of the following is NOT a form of credit enhancement commonly found on a private-label mortgage-backed security whose mortgage pool consists of subprime loans? A. Government insuranc...

WGU D080 Managing in a Global Business Environment 2023/2024 with complete solution Questions AAA ratings The highest possible rating that may be assigned by a credit rating agency for a bond absolute advantage The ability of an individual or group to produce a good or service more efficiently than another absolute quota Quota that strictly limits the quantity of goods that may enter a country acquisition The act of taking over ownership or controlling a business Ad val...

Swaps - Introduction Questions And Answers 2024. On each payment date, the fixed rate receiver must typically pay an amount equal to: a. The product of the floating rate and the nominal principal b. The product of the nominal principal and the difference between the floating and fixed rate c. The nominal amount plus the product of the floating rate and the nominal principal - correct answer B. Payments on a swap are netted off against one another. Therefore the difference between the fixed a...

RPR - displays current and historical credit rankings by issuer from various rating agencies SOVR - a monitor of global sovereign Credit Default Swap spreads IFMO - displays inflation tracking and data such as rates, targets, and forecasts GEW - shows key economic statistics by country ECFC - displays economic forecasts for identifying trends in global economies