Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

1.) Companies manage risk in many ways. Which of the following is NOT one of them?

A. Use derivative contracts to reduce risk

B. Transfer the ways.

C. Transfer the risk to an insurance company

D. Minimize the magnitude of loss associated with adverse event

E. none of the above

 

2.) Two companies are evaluating a possible swap. Company A can issue floating-rate debt at LIBOR + 1%, and it can issue fixed rate debt at 9%. Company B can issue floating-rate debt at LIBOR + 1.5%, and it can issue fixed-rate debt at 9.4%. If A issues floating-rate debt and B issues fixed-rate debt, and then they engage in following swap: A will make a fixed 7.95% payment to B, and B will make a floating-rate payment equal to LIBOR to A. Which of the subsequent statements is right?

A. The swap is advantageous to A, however not to B

B. The swap is not advantageous to either A or B

C. The swap is advantageous to B, however not to A

D. The swap is advantageous to both A and B

E. none of the above

 

3.) "The June Treasury bond futures contract has a quoted price of 102'12. Are current market interest rates lower or higher than the standardized rate on a futures contract?

A. lower, because the contract is selling at a premium

B. higher, because the contract is selling at a premium

C. higher, because the contract is selling at a discount

D. more information is required to answer this problem

E. None of the above answers is correct

 

4.) The June Treasury bond futures contract has a quoted price of 102'12. What is current value of one contract in dollars?

A. 102,375

B. 102,120

C. 90,563

D. 90,180

E. none of the above

 

5.) The June Treasury bond futures contract has a quoted price of 102'12. What is the implied yearly interest rate?

A. 3.05%

B. 5.85%

C. 2.90%

D. 5.80%

E. none of the above

 

6.) The December Treasury bond futures contract has a quoted price of 95'18 and the implied interest rate is 3.2% (semiannual). If annual interest rates go up by 1.00 percentage point, what is the value of one contract?

A. $76,939

B. $ 69,591

C. $95,523

D. $85,504

E. none of the above

 

7.) Six months ago, a December Treasure bond futures contract had a quoted price of 95'16. Now, the quoted price is 99'4. What is gain or loss on contract?

A. Loss of $3625

B. Gain of $3625

C. Loss, but cannot determine amount

D. Gain, but cannot determine amount

E. none of the above

 

8.) Which of the following are ways risk management can be used to increase the value of a firm?

A. risk management will change the capital structure of the company

B. risk management will allow managers to defer income

C. risk management will not affect taxes.

D. all of the above

E. none of the above

 

9.) Two basic types of hedges involving the futures markets are long hedges and short hedges. Which of the subsequent is right?

A. both long and short hedges involve buying futures contracts

B. a short hedge involves buying futures contracts

C. both long and short hedges involve selling futures contracts

D. a long hedge involves buying futures contracts

E. none of the above

 

10.) Which of the following is correct?

A. A speculator who buys or sells futures contracts has an offsetting position in the spot market

B. A speculator who sells futures contracts believes the price will increase

C. A speculator who sells futures contracts believes the price will decrease

D. A speculator who buys or sells futures contracts takes little risk

E. none of the above

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93348

Have any Question? 


Related Questions in Financial Accounting

Recording transactions in a journal and t-accounts

Recording Transactions (in a Journal and T-Accounts); Preparing and Interpreting the Balance Sheet Bearings & Brakes Corporation (B&B) was incorporated as a private company on June 1, 2010. The company's accounts include ...

A young entrepreneur with a passion for shoes has a new

A young entrepreneur with a passion for shoes has a new start-up, Shoes for You, Inc. with a calendar year end of December 31, 2016. Complete the Journal Entries for all transactions listed for Shoes for You, Inc. for th ...

Compute divisional income lo 14-1 eastern merchants shows

Compute Divisional Income (LO 14-1) Eastern Merchants shows the following information for its two divisions for year 1: Eastern Western Sales revenue $ 1,270,000 $ 3,870,000 Cost of sales 804,500 1,935,000 Allocated corp ...

Using the human life value method how much life insurance

Using the "Human Life Value" method, how much life insurance should you purchase if you have 45 years until retirement, an annual income of $61,500 received at the start of each years, and a time value of money of 7%? (A ...

The comparative statements of osborne company are presented

The comparative statements of Osborne Company are presented here. OSBORNE COMPANY Income Statements For the Years Ended December 31 2014 2013 Net sales $1,894,859 $1,754,819 Cost of goods sold 1,062,859 1,010,319 Gross p ...

The end partnership has the following capital balances as

The E.N.D. partnership has the following capital balances as of the end of the current year. Pineda                      $280,000 Adams                        240,000 Fergie                         210,000 Gomez         ...

What are the most common budgets used by manufacturing

What are the most common budgets used by manufacturing organizations? What are the most common budgets used by service organizations? Provide some examples of how these types of budgets might be used in your personal lif ...

Gazelle company has the following materials standards have

Gazelle Company has the following materials standards have been established for a particular product: Standard quantity per unit of output 2.0 meters Standard price $ 10.00 per meter The following data pertain to operati ...

Smokey international inc recently aquired the kurtz

Smokey International Inc recently aquired the Kurtz Builders Company. Kurtz has incomplete accounting records. On one particular project, only the information below is available. Cost incurred during year ..... 2014 $200 ...

Directionsanswer the following questions on a separate

Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link i ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate