THINGS I GOT WRONG Flashcards
Which order would protect an investor short FTSE futures?
Buy with an additional stop order
Where are Norwegian futures contracts traded?
LSE Derivatives
What will investors need to do when calculating the fair value of a forward?
Difference between current interest rates and the shares dividend yield
What will happen to output if the marginal cost of mining moves and remains above the current price?
Output will stop
How often OATs pay coupons?
Annually
How can issuers of preference shares make an issue more attractive for the investor?
Adding possibility of conversion to ordinary shares into the issue
What are the mot common maturities for CDs?
Three and six months
What is the main reason why a company would use a non-deliverable forward?
Hedge an FX exposure in a currency that is not fully convertible
Why is an ISDA master agreement important should one party to the agreement default?
It allows for all of the deals to be netted rather than considered separately
A collateralised debt obligation (CDO) allows the originator to:
Pass credit risk onto other investors
What must happen if a credit line where a member is extending credit to a client is being utilised after 5 days?
A written loan agreement must be in place
FCA rules
How does an exchange ensure that an EDSP is appropriately calculated?
Use an open declared mechanism that will prevent price manipulation
