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Question
Plain vanilla interest rate swaps are exchanges of
A. principle only.
B. interest only.
C. principle and interest.
D. principle and currency.
E. interest rate and currency.
Answer
This answer is hidden. It contains 11 characters.
Related questions
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Due to convexity problems, banks are actually better off using the simpler repricing model to manage interest rate risk rather than the duration model.
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If a bank has a negative repricing gap, falling interest rates increase profitability.
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In a bank's three-month maturity bucket, a 30-year ARM with a rate reset in six months would be considered a fixed rate asset, but in its one-year maturity bucket, this ARM would be considered a rate-sensitive asset.
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Explain how liquidity risk can lead to insolvency risk.
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The BIS recommends that depository institutions do which of the following to realistically measure liquidity risk?I. Construct a maturity ladder of funding requirements over both the short and long run.II. Conduct scenario analyses of the bank's implied liquidity position under different bank and economic conditions.III. Always keep the loan to deposit ratio less than one.A. I onlyB. II onlyC. I and II onlyD. II and III onlyE. I, II, and III
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A bank meets a deposit withdrawal with one of the following alternatives. Which one of the following is an example of using stored liquidity to meet a deposit withdrawal?A. Increase in Euro dollar depositsB. Contacting an investment banker to find new corporate depositsC. Increasing Fed funds borrowedD. Issuance of a negotiable CDE. Selling the bank's holdings of T-bills
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B. the bonds had variable interest rates.
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E. none of the above
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Under current reserve requirements, bank loan sales with recourse are considered a liability and are subject to reserve requirements.
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Vulture funds specialize in buying distressed loans.
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