A long-term investor who searches for protection against rising consumer prices would most likely pu

A long-term investor who searches for protection against rising consumer prices would most likely purchase a:

a. U.S. Treasury bond

b. Mortgage-backed security

c. U.S. Treasury inflation protection security

d. Equity shares in a financial institutio

Uncle Robbie, who does not have a margin account, bought a Treasury bond on the secondary market that has 10 years until maturity and a 2% coupon payment, paid semi-annually. Which of the following risks is he subject to?

a. Financial risk

b. Exchange rate risk

c. Default risk

d. Reinvestment rate risk

A commercial bank owns a portfolio of fixed income securities with a market value of $810 million. The bank is concerned about a spike in inflation during the coming month, citing a potential energy shortage. A surge in oil and natural gas price would place significant downward pressure on the value of the portfolio. The risk management tool most likely to help the bank is:

a. Beta

b. Standard deviation

c. Value at risk

d. Correlation coefficient

 

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