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Finance companies raise funds in the money market by selling :
(ക) Commercial paper
(B) TFederal funds
(C) Eurodollars
(D) Negotiable certificate of deposits

The interest rate that equates the present value of the cash flow received from a debt
instrument with its market price today is the :

(ക Discount rate (8) Simple interest rate
(C) യല to maturity (D) Real interest rate

The riskiest capital market security is :
(ക) Preferred stock (B) Common stock
(C) Treasury bonds (D) Corporate bonds

If a firm sells an option :
(ಗಿ) There is a negative cash flow യ) There is a positive cash flow
(೮) The hedge is avoided (D) Cash flow is not affected

Bonds with relatively low risk of default are called :
(ಸ) Investment grade bond ಕ (3) Zero coupon bonds
(0 Junk bonds (D) None of the above

The riskiness of an assets return that results from interest rate changes is called :

(ಗಿ) Coupon-rate risk (ए) Reinvestment risk
~ (€) Yield-to-maturity risk (D) Interest —rate risk
MNC rely mostly on ம reduce transaction exposure.
(4) Currency hedges (B)- Options
(C) Risk-taking (D) Forward hedges

The forward market is especially well-suited to offer hedging :
(ക) Translation risk exposure (8) Transactions risk exposure
(C) Political risk exposure (D) Taxation

The simplest hedging method, which involves the purchase or sale of foreign currency using a
forward contact is the :

(A) Currency option (B) Symmetric hedge

(©) Forward hedge (D) Derivative

11 131/2015
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