Credit default swap is essentially

Assignment Help Financial Management
Reference no: EM13940398

1. An option strategy in which you hold a long position in both a put and a call option with the same strike price is called

A) portfolio insurance.

B) a strangle.

C) a straddle.

D) a butterfly spread.

2. A credit default swap is essentially a

A) call option on the firm's debt.

B)put option on the firm's debt.

C) call option on the firm's assets

D) put option on the firm's assets.

Reference no: EM13940398

Questions Cloud

Complete a swot analysis of gambling industry : Select an industry, such as the gambling industry, to complete a SWOT analysis. Access the profile overview for the selected industry: In the University Library, click Company Directory and Financials.
What is the default risk premium on the corporate bond : If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 7.4%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default ri..
Information provided regarding the forecasts : Given the actual financial statements below and the information provided regarding the forecasts, construct the income statement and balance sheet for CSR for 2014. You will need to work out the expected level of cash at the end of 2014 using the ..
Describe personal items each arson investigator should carry : Describe the personal items each arson investigator should carry. Identify at least 2 lighting types that would be necessary to use in an arson scene.
Credit default swap is essentially : An option strategy in which you hold a long position in both a put and a call option with the same strike price is called. A credit default swap is essentially a
Estimate the fixed and variable components : Estimate the fixed and variable components using the method of least squares. Using the cost formula, predict the total cost of shipping if 14 packages are shipped.
Pure expectations theory : If the pure expectations theory is correct (that is, the maturity risk premium is zero), which of the following is CORRECT? An upward-sloping Treasury yield curve means that the market expects interest rates to decline in the future. A 5-year T-bond ..
Role of capitalism plays in corporate decision making : 1. Become an advocate for either the consumer or the industry. Prepare an argument explaining the major reasons why you support either the consumer or the industry. 2. Explain the role of capitalism plays in corporate decision making.
What is the internal rate of return of the project : What is the internal rate of return of the following project if the required rate of return is 15%? The initial investment is $175,000. Note: Can you please show me how to do this? I am having trouble following along with the instructions.

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the cost of purchasing the equipment

Andiola Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 30 percent. If the company purchases the equipment for $1,500,000 it will depreciate it over 5 years, using straight-line depreciation.

  Compute the profits-losses from the strategy

The trade is performed over one week-How do the results change under these various scenarios? Discuss your results.

  Se straight-line depreciation to zero over the projects life

You are evaluating two different silicon wafer milling machines. The Techron I costs $213,000, has a three-year life, and has pretax operating costs of $54,000 per year. The Techron II costs $375,000, has a five-year life, and has pretax operating co..

  How much is the firms taxable income

The Talley Corporation had a taxable income of $500,000 from operations after all operating costs but before (1) interest charges of $70,000, (2) dividends received of $80,000, (3) dividends paid of $40,000, and (4) income taxes. How much is the firm..

  Investment will yield earnings before interest and taxes

SoHo Corporation, a boutique clothing company, has asked for your advice on whether to invest $40 million in a new line of beachwear. The investment will yield earnings before interest and taxes of $10 million a year, and any depreciation on the proj..

  Financial statement compliant with gaap

Explain whether users of financial statements should exercise caution when interpreting financial statement compliant with GAAP.

  What will be the impact on the firm''s equity accounts

If the firm declares a 10 percent stock dividend, what will be the impact on the firm's equity accounts? what is the impact of a 10 percent stock dividend on the wealth position of the firm's existing stockholders?

  What will be its dividend payout ratio-unlevered beta

Global Inc. has a target capital structure that consists of 30% debt and 70% equity. The firm anticipates that its capital budget for the next year will be $1 million. If it reports net income of $900,000 and it follows a residual dividend policy, wh..

  How much is due at maturity

Andres Michael bought a new boat. He took out a loan for $24,420 at 2.75% interest for 4 years. He made a $4,850 partial payment at 4 months and another partial payment of $2,810 at 9 months. How much is due at maturity?

  Average and marginal tax rates on taxable income

Suppose that in addition to $16.85 million of taxable income, Texas Taco, Inc., received $9,200,000 of interest on state-issued bonds and $820,000 of dividends on common stock it owns in Arizona Taco, Inc. Use the tax schedule in Table 2.3 to calcula..

  Decrease the variance of a portfolio of assets

To decrease the variance of a portfolio of assets, simply add assets with low/small variance. An investor who is in the 33% tax bracket is indifferent between a 9% tax-free muni and a 6% taxable bond. The standard deviation of a portfolio of assets i..

  What was the actual rate paid per direct labor-hour

You have recently accepted a position with Vitex, Inc., the manufacturer of a popular consumer product. During your first week on the job, the vice president has been favorably impressed with your work. How much actual variable manufacturing overhead..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd