Tranches Samenvattingen, Aantekeningen en Examens

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 Central...

Suppose that the Federal Reserve announces that it will sell a large amount of T-bills. This action will have ripple effects through the economy. What is the likely impact on the stock market? Decrease in the value of stocks - ANSWER Decrease in the value of stocks Mortgage backed securities are often created with different tranches such as AAA, A, BBB. Which of the following statements is incorrect regarding the differences between these tranches? - ANSWER The different tranches are backed ...

Primary economic role of structuring - ANSWER-Structured securities complete the market - structured to meet all different needs & helps investors prepare for all states of the world MBS - ANSWER-Mortgage-backed securities - security secured by pool of mortgages (mortgages are the collateral) RMBS - Agency RMBS - ANSWER-Residential MBS - low credit risk: backed by the US government - has prepayment risk: borrower' s right to repay mortgage early a key risk Contraction risk - ANSWER-Av...

Primary economic role of structuring - Answer Structured securities complete the market - structured to meet all different needs & helps investors prepare for all states of the world MBS - Answer Mortgage-backed securities - security secured by pool of mortgages (mortgages are the collateral) RMBS - Agency RMBS - Answer Residential MBS - low credit risk: backed by the US government - has prepayment risk: borrower' s right to repay mortgage early a key risk Contraction risk - Ans...

CAIA Level 1 - Topic 6 Structured Products Questions& Answers 100% Accurate! Primary economic role of structuring - ANSWER-Structured securities complete the market - structured to meet all different needs & helps investors prepare for all states of the world MBS - ANSWER-Mortgage-backed securities - security secured by pool of mortgages (mortgages are the collateral) RMBS - Agency RMBS - ANSWER-Residential MBS - low credit risk: backed by the US government - has prepayment risk: borrowe...

An open-end management company is a: A. mutual fund B. publicly traded fund C. fixed unit investment trust D. real estate investment trust A. mutual fund To impose the maximum sales charge, under FINRA rules, mutual funds must offer investors all of the following benefits EXCEPT: A. Breakpoints B. Plan Completion Insurance C. Rights of Accumulation D. Letter of Intent B. Plan Completion Insurance A closed-end...

Primary economic role of structuring - ANSWER-Structured securities complete the market - structured to meet all different needs & helps investors prepare for all states of the world MBS - ANSWER-Mortgage-backed securities - security secured by pool of mortgages (mortgages are the collateral) RMBS - Agency RMBS - ANSWER-Residential MBS - low credit risk: backed by the US government - has prepayment risk: borrower' s right to repay mortgage early a key risk Contraction risk - ANSWER-Av...

An open-end management company is a: A. mutual fund B. publicly traded fund C. fixed unit investment trust D. real estate investment trust A. mutual fund To impose the maximum sales charge, under FINRA rules, mutual funds must offer investors all of the following benefits EXCEPT: A. Breakpoints B. Plan Completion Insurance C. Rights of Accumulation D. Letter of Intent B. Plan Completion Insurance A closed-end...

LBO Model Quiz Advanced Questions With Solutions All of the following types of debt are typically "floating-rate" instruments used to finance an LBO EXCEPT: a. Subordinated Notes b. Term Loan A c. Term Loan B d. Revolver e. None of the above - ANS Explanation: The correct answer choice is A. All of the answer choices listed above with the exception of A are floating-rate debt instruments, meaning that its interest rate is not fixed (e.g. 8% each year until maturity) but rat...

All of the following types of debt are typically "floating-rate" instruments used to finance an LBO EXCEPT: a. Subordinated Notes b. Term Loan A c. Term Loan B d. Revolver e. None of the above -ANSWER Explanation: The correct answer choice is A. All of the answer choices listed above with the exception of A are floating-rate debt instruments, meaning that its interest rate is not fixed (e.g. 8% each year until maturity) but rather tied to something like LIBOR (e.g. LIBOR + 3%)...