Financial Transaction
spyderhp220
Wk3FinancialTransactionRiskAssignmentB.docx
|
Week 3: Learning Team Assignment: Financial Risks FIN/366 Version 2 |
2 |
University of Phoenix Material
Week 3 Learning Team Assignment: Financial Transaction Risks
Describe the risk exposure(s) in the following financial transactions.
Identify which transactions are influenced by interest rates or interest income. (CAUTION: Some can be influenced by both!)
Risk Types: Interest rate risk, Credit risk, Technology risk, Foreign exchange rate risk, Country, or sovereign risk
Financial Transactions |
Risk Type |
Describe and justify risk type |
Interest Rate or Interest Income? |
|
A bank finances a $10 million, six-year fixed-rate commercial loan by selling one-year certificate of deposit. |
|
|
|
|
An insurance company invests its policy premiums in a long-term municipal bond portfolio. |
|
|
|
|
A French bank sells two-year fixed-rate notes to finance a two-year fixed-rate loan to a British entrepreneur. |
|
|
|
|
A Japanese bank acquires an Austrian bank to facilitate clearing operations. |
|
|
|
|
A bond dealer uses his own equity to buy Mexican debt on the less developed country (LDC) bond market. |
|
|
|
|
A securities firm sells a package of mortgage loans as mortgage-backed securities. |
|
|
|
|
Describe the features of the method you would choose to measure the interest risks identified.
|
