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1) A bank's core business is credit lending. The following risk and return numbers are given for the last year.
Risk
Return
Credit
10
5
Market
3
Risk from internal processes (process risk)
0
a. If credit lending is core, how can the bank document the risk on the competence level?
b. It turns out that the process risk solely comes from losses in the credit administration process (e.g. credit processing is too slow, too many errors). Considering this additional risk, should the bank still offer credit lending?
2) f
A corporate has a loan with 5 years maturity and a floating interest rate. The treasurer - just finished his Master of Science program - expects the interest rate to decrease in the next year from the current level of 5 % p.a. to a level of 3 %. The risk manager observes a high interest rate volatility of 150 basis points (=1.5 %) p.a. Assume that interest rate changes are normal and that it does not cost any money to change the nature of the loan from floating interest payments to fixed interest payments of 5 %. Please give short answers.
a. The company's main objective is to minimize cash flow risk. Explain what the company should do.
b. The company's main objective is to minimize market value risk. Explain what the company should do.
large Businesses and small now compete in a truly global economy. To become successful in another nation it is essential to understand cultural differences that exist.
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based on what you have learned from your research on regression analysis and correlation answer the following questions
Calculate the 6 monthly discount factors D(t) and the semi-annual zero coupon rates z(t), where t = 0.5, 1, 1.5, ., 9.5, 10. (2) Using the discount factors derived in (1), calculate the price of a 4½ year semi-annual coupon bond with an annual coupon..
What is the value of a share of common stock that paid $2.00 last year, the growth rate is 8%, assume the risk free rate is 4%, the market return is 10% and the Beta is 1.5. Please show your work. Thanks
Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?
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