International Finance And Treasury - Study Mode

[#361] Inverse relationship between price change and interest rate change is represented by
Correct Answer

(B) negative duration

Explanation

Solution: Inverse relationship between price change and interest rate change is represented by negative duration. A situation in which the price of a bond or other debt security moves in the same direction of interest rates. That is, negative duration occurs when the bond prices go up along with interest rates and vice versa.

[#362] Duration which is divided by interest rate plus one is classified as
Correct Answer

(C) modified duration

Explanation

Solution: Duration which is divided by interest rate plus one is classified as modified duration. Modified duration is a formula that expresses the measurable change in the value of a security in response to a change in interest rates. Modified duration follows the concept that interest rates and bond prices move in opposite directions.

[#363] Larger fluctuations in portfolio value of foreign exchange of financial institutions leads to
Correct Answer

(B) greater volatility of rates

Explanation

Solution: Larger fluctuations in portfolio value of foreign exchange of financial institutions leads to greater volatility of rates. It is the money value of your investment portfolio.

[#364] Services such as commercial trade transactions and positions in financial investments provided by financial institutions are classified as
Correct Answer

(C) agent services

Explanation

Solution: Services such as commercial trade transactions and positions in financial investments provided by financial institutions are classified as agent services. A registered agent, or agent for service of process (SOP), provides a legal address within the jurisdiction where legal documents may be served during business hours.

[#365] For a foreign exchange of specific currency, non-hedged position is classified as
Correct Answer

(A) open position

Explanation

Solution: For a foreign exchange of specific currency, non-hedged position is classified as open position. A naked position is a securities position, long or short, that is not hedged from market risk. Both the potential gain and the potential risk are greater when a position is naked instead of covered or hedged in some way.