Liquidity Coverage Ratio - LCR - correct answer The liquidity coverage ratio (LCR) refers to highly liquid assets held by financial institutions to meet short-term obligations. The ratio is a generic stress test that aims to anticipate market-wide shoc...
Liquidity Coverage Ratio - LCR - correct answer The liquidity coverage ratio
(LCR) refers to highly liquid assets held by financial institutions to meet short-term obligations. The ratio
is a generic stress test that aims to anticipate market-wide shocks. The liquidity coverage ratio is
designed to ensure financial institutions have the necessary assets on hand to ride out short-term
liquidity disruptions.
2051a - correct answer report collects data elements that will enable the Fed
to assess the liquidity profile of reporting firms. This reports is to monitor compliance with the liquidity
coverage ratio rule.
Embedded Option - correct answer An embedded option is a provision in a
security that is an inseparable part of the other instrument. An embedded option is a special condition
attached to a security, and in particular, a bond that gives the holder or the issuer the right to perform a
specified action at some point in the future. An embedded option is part of another security, and as such
does not trade by itself. Nevertheless, it can affect the value of the security of which it is a component. A
security is not limited to one embedded option, as there may be several embedded options in one
security.
Discretionary vs. Non-Discretionary - correct answer There are two types of
investment accounts: discretionary and non-discretionary. A discretionary account is one that allows a
broker to buy and sell securities without the client's consent. However, they still must make decisions in
accord with the clients stated investment goals.
A non-discretionary account is one where the client makes all the trading decisions. With these types of
accounts, the broker's job is simply to receive and execute the clients requested trades, and try and get
the best price possible. The broker may still make recommendations on what to purchase, but they will
not make these purchases without first getting the investors consent.
forward contract - correct answer an informal agreement traded through a
broker-dealer network to buy and sell specified assets, typically currency, at a specified price at a certain
future date.
, aggregate - correct answer formed or calculated by the combination of many
separate units or items; total.
Balance Of Trade - BOT - correct answer The balance of trade (BOT) is the
difference between a country's imports and its exports for a given time period.
Affiliate - correct answer An affiliate is a type of inter-company relationship in
which one of the companies owns less than a majority of the other company's stock. Affiliation can also
describe a type of inter-company relationship in which at least two different companies are subsidiaries
of a larger company.
An affiliate is determined by the degree of ownership a parent company holds in another company.
market value - correct answer value is the current price at which you can sell
an asset.
2052a lendable value - correct answer market value * (1 - LCR haircuts)
Unencumbered Assets - correct answer Refers to assets that are purchased
outright that are (i) free of legal, regulatory, contractual, or other restrictions on the ability of the
reporting entity to monetize the assets; and (ii) not pledged, explicitly or implicitly, to secure or to
provide credit enhancement to any transaction.
purchase outright - correct answer To pay the full purchase price amount in
cash./ To pay cash for the full purchase price.
monetize - correct answer to convert an asset or any object into mone
A pledged asset - correct answer collateral pledged by a borrower to a lender
(usually in return for a loan). The lender has the right to seize the collateral if the borrower defaults on
the obligation.
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