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NEW QUESTION: 1
Which of the following statements is a correct description of the phrase present value of a basis point?
A. It refers to the discounted present value of 1/100th of 1% of a future cash flow
B. It refers to the present value impact of 1 basis point move in an interest rate on a fixed income security
C. It is the principal component representation of the duration of a bond
D. It is another name for duration
This is a trick question, no great science to it. Remember that the 'present value of a basis point' refers to PV01, which is the same as BPV (basis point value) referred to in the PRMIA handbook. In other textbooks, the same term is also variously called 'DV01' (dollar value of a basis point). Remember these other terms too.
PV01, or the present value of a basis point, is the change in the value of a bond (or other fixed income security) from a 1 basis point change in the yield. PV01 is calculated as (Price * Modified Duration/10,000).
NEW QUESTION: 2
In VSM 6.3.2, which archive clip format allows for the downloading and playing back of multiple camera feeds simultaneously?
NEW QUESTION: 3
Rapacity Consultants has just finished a project feasibility study for a cash-rich firm at a cost of $3 million.
The consultants have concluded after much analysis that the project's cash flows have a net present value of $1.3 million and a payback period of 5.3 years. The firm should:
A. accept the project since it has a positive NPV.
B. reject the project since it has a long payback period.
C. reject the project since it has a negative NPV.
D. none of these answers.
The $3 million spent on consultants represent sunk costs and must be ignored while looking toward the future. In that direction, the project has a positive NPV and should be accepted.
NEW QUESTION: 4
Which of the following statements about Credit Default Swaps (CDS) is correct?
A. CDS are used to recover funds from defaulted swap counterparties.
B. CDS provide compensation to the protection buyer, should a specified credit event occur to a third party entity.
C. CDS provide protection against the default of the trade counterparty that buys the CDS.
D. CDS provide protection against specified credit events to the party receiving the CDS premium payments.
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