Default risk premium - Study guides, Class notes & Summaries

What does WACC stand for? a: Working amount of corporate cash b: Weighted average company cost c: Weighted average cost of capital d: Working amount of corporate costs correct answers c: Weighted average cost of capital If the expected return of a project is below that of a financial asset of comparable risk, the firm should ______ the project. a: Accept b: Reject correct answers b: Reject One of the disadvantages of using historical returns to estimate the market risk premium is tha...

mortgage Broker - Answer- Functions as a middleman between the borrower and the lender, negotiating, selling or arranging loans to be delivered to large investors Mortgage Banker - Answer- Provide their own funds for the purpose of providing mortgage financing Correspondent Lender - Answer- Smaller in scale then mortgage bankers or brokers, these lenders typically extended loans with their own funds at their own risk Origination - Answer- The process of creating a new mortgage loan U...

What does TILA stand for?Answer - Truth-In-Lending Act, Regulation Z What is a HELOC loan?Answer - a secured loan in that you are borrowing against the equity that has been built in your house What is a REFI loan?Answer - LTV stands forAnswer - Loan to Value Define PMI and state what the acronym stands for.Answer - Private mortgage insurance- on conventional loans Define one time variable funding fee and people in what situations is it waived for?Answer - Disabled veterans ...

Exam 2 Questions & Answers FINC514. Chapter 6 - CORRECT ANSWER Chapter 6 Which tend to be more volatile, short- or long-term interest rates? - CORRECT ANSWER Short-term interest rates If the inflation rate was 3.00% and the nominal interest rate was 4.60% over the last year, what was the real rate of interest over the last year? Disregard cross-product terms; that is, if averaging is required, use the arithmetic average. - CORRECT ANSWER The nominal interest rate consists of the real ...

CFA Level 1 Quant question and answers 2024 verified to passnominal risk free rate equals... - correct answer real risk free rate + expected inflation required interest rate on a security - correct answer nominal risk free rate + default risk premium + liquidity premium + maturity risk premium EAR or APY - correct answer (1+periodic rate)^m - 1 always higher than annual percentage rates (not compounded) ordinary annuity - correct answer cash flows that occur at the end of each compou...

Price change based on convexity - -duration(change in yield)+1/2(convexity)(change in yield)^2 Effective Duration - Required if a bond has embedded options: [(v-)-(v+)]/[2V0(change in curve)] Modified Duration - [(v-)-(v+)]/[2V0(change in yield)] Future Value - PV(1+(I/Y)^N) PV - FV/(1+r)^n PV of perpetuity - PMT / discount rate Approximate percentage price change of a bond - (-)(modified duration)(ΔYTM) Nominal Risk Free - Real Risk Free + expected inflation Required Return - Nominal r...

AFSB 152 Exam Questions and Answers 100% Solved What does the premium to surplus ratio indicate? ️️o Can show how much the capacity has to withstand underwriting miscalculations o More premiums written, the higher the ratio, and more cause for concern o Underwriting/investment losses cause a decrease in policyholders' surplus, and causes increase in ratio Suretyship ️️An obligation to pay the debts of, or answer for the default or miscarriage of another Benefits to Project ...

Default Risk CORRECT ANSWER Risk that a borrower will not make promised payments Liquidity Risk CORRECT ANSWER Risk of recieving less than fair value for an investment if it must be sold for cash quickly Required Interest Rate on A Security CORRECT ANSWER = Nominal Interest Rate + Default Risk Premium + Liquidity Premium + Maturity Risk Premium Real Risk Free Rate / Nominal Risk Free Rate CORRECT ANSWER - Single period interest rate for a completely risk-free security with no inflati...

CFA Level 1 Formulas question & answers 100% correct 2024 Price change based on convexity - correct answer -duration(change in yield)+1/2(convexity)(change in yield)^2 Effective Duration - correct answer Required if a bond has embedded options: [(v-)-(v+)]/[2V0(change in curve)] Modified Duration - correct answer [(v-)-(v+)]/[2V0(change in yield)] Future Value - correct answer PV(1+(I/Y)^N) PV - correct answer FV/(1+r)^n PV of perpetuity - correct answer PMT / discount rate Ap...

NMLS SAFE EXAM 2024 QUESTIONS AND ANSWERS ALREADY PASSED What does TILA stand for? Truth-In-Lending Act, Regulation Z What is a HELOC loan? a secured loan in that you are borrowing against the equity that has been built in your house What is a REFI loan? LTV stands for Loan to Value Define PMI and state what the acronym stands for. Private mortgage insurance- on conventional loans Define one time variable funding fee and people in what situations is it waived for? Disabled ...