Credit default swap - Study guides, Class notes & Summaries

Value of IP Investment - ANSWER-probability of generating large positive cash flows* cash flow expected in year 1 / investors required rate of return -g Operational Risk - ANSWER-In breaking down the impact of operational risks on hedge fund failures, fraud (i.e., lying about investments and/or performance) was the leading cause, followed by (in order): theft of assets, style drift and unauthorized trades, and inadequate resources. fee for taking a firm private - ANSWER-typically 1% cds...

Value of IP Investment - ANSWER-probability of generating large positive cash flows* cash flow expected in year 1 / investors required rate of return -g Operational Risk - ANSWER-In breaking down the impact of operational risks on hedge fund failures, fraud (i.e., lying about investments and/or performance) was the leading cause, followed by (in order): theft of assets, style drift and unauthorized trades, and inadequate resources. fee for taking a firm private - ANSWER-typically 1% cds...

What is the Great Recession? correct answers greatest economical crash since great depression() from housing market banks collapsed, auto industry bankrupt, stock market lost 33.8 percent of value, unemployment around 10%, 2.6 mill lost jobs, 4 mill homes foreclosed, 49 mill people food insecure, what are some factors that caused the Great Recession? correct answers financial crash in 2008, elite deviance, people assumed housing prices always go up What is a flipper? correct answers ...

What is a Credit Default Swap (CDS)? - Answers-an insurance policy on the default risk of a bond or loan. The seller of a CDS collects an annual premium (and sometime an upfront fee) from the swap buyer. The buyer of the swap collects nothing unless the bond issuer or loan borrower defaults, in which the seller of the swap essentially pays the drop in value from par to the swap buyer. How can a CDS be used for speculation? - Answers-CDSs can be used to speculate on the financial health of fir...

Wall Street Prep 2023-2024 Exam Questions and Answers All Correct What is a Mortgage Backed Security? - ANSWER a security that pays its holder a periodic payment based on the cash flows from the underlying mortgages that fund the security What is a Collateralized Debt Obligation? - ANSWER a type of security that pools together a number of interest paying assets and pays "coupon payments" based on those assets future cash flows (include MBS's) Why would a company li...

mortgage backed security correct answers a collection of mortgages that have been packaged into a security that investors can buy credit default swap correct answers a type of contract that offers a guarantee against the non-payment of a loan or mortgage such as a mortgage back security. Three primary functions of the treasurer of a firm. correct answers Cash management, credit management, financial planning. Three primary functions of the controller of a firm. correct answers Cost acco...

Assessment Mutual Insurer - Has the right to assess policyowners an additional amount if the insurer's financial operations are unfavorable Retention - Firms retain part or all of the losses that can result from a given loss; Ex: Expense, set aside liquid, credit line Risk - Uncertainty about chance, timing, or amount of loss Chance of Loss - Probability that an event will occur Objective Risk - The relative variation of actual loss from expected loss; (ActualExpected)/Expected; higher va...