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Question
You are an investment banker and one of your large U.S. corporate clients has come to you asking for help deciding on the best market in which to place a sizeable issue of bonds. You could try to issue dollar-denominated bonds, or Euro or yen-denominated bonds. You could also issue in the United States or overseas. What major factors should you consider in advising your client on where to market the issue?
Answer
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Related questions
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II. Buy bond futures contracts.
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IV. Buy put options on the bonds.
A. I only
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The bank's one-year repricing gap is (Million $)A. $425.B. $285.C. $74.D. $140.E. $66.
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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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b) Borrowed funds to total assets
c) Loan commitments to total assets
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Explain how liquidity risk can lead to insolvency risk.
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A. Class A
B. Class B
C. Class C
D. Class Z
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B. the bonds had variable interest rates.
C. the bonds were marketable and the loans were not.
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