Fin4486 Study guides, Class notes & Summaries

Continuous Rateln(1+effective annual rate) Bond Yielddiscount rate which, when applied to all the cash flows of the bond, causes the present value of the cash flows equal to the bond's market price. All cash flows are discounted using the same rate. Zero Ratethe n-year zero-coupon interest rate is the rate of interest on an investment that starts today and lasts for n years. All the interest and principal is realized at the end of n years. There are no intermediate payments. Each cash...

Continuous Rate ln(1+effective annual rate) Bond Yield discount rate which, when applied to all the cash flows of the bond, causes the present value of the cash flows equal to the bond's market price. All cash flows are discounted using the same rate. Zero Rate the n-year zero-coupon interest rate is the rate of interest on an investment that starts today and lasts for n years. All the interest and principal is realized at the end of n years. There are no intermediate payments. Each c...

Future Contract is an agreement to buy or sell an asset at a certain time in the future for a certain price Forward Contract similar to futures except that they trade in the over-the-counter market and the delivery price is fixed Future Marked to market Call Option option to buy a certain asset by a certain date for a certain price (the strike price) Put Option option to sell a certain asset by a certain date for a certain price (the strike price

Fixed Income The roots of the bond market What do the green bars at the bottom signify? According to the table on the right, which country owns 2.9% of total US debt? What quality of US government bonds causes investors to buy them when market volatility rises? Why is fixed income called fixed income? Question1: Question2: Question3: Question4: Bond Valuation When investors doubt the creditworthiness of a As a general rule, what percentage of debt to GDP will make a government’s bond yields sp...

Fixed Income The roots of the bond market What do the green bars at the bottom signify? According to the table on the right, which country owns 2.9% of total US debt? What quality of US government bonds causes investors to buy them when market volatility rises? Why is fixed income called fixed income? Question1: Question2: Question3: Question4: Bond Valuation When investors doubt the creditworthiness of a As a general rule, what percentage of debt to GDP will make a government’s bond yields sp...

Fixed Income The roots of the bond market What do the green bars at the bottom signify? According to the table on the right, which country owns 2.9% of total US debt? What quality of US government bonds causes investors to buy them when market volatility rises? Why is fixed income called fixed income? Question1: Question2: Question3: Question4: Bond Valuation When investors doubt the creditworthiness of a As a general rule, what percentage of debt to GDP will make a government’s bond yields sp...

Financial Engineering and Risk management final review will cover derivatives such as Options, futures, forwards, as well as hedging, arbitrage, currency exchanges and much more.