1. Which of the following statements is most likely to be correct about derivatives? A. A derivative is a financial instrument that derives its value based on the performance of the underlying. B. Derivatives are standardized financial instruments and cannot be customized. C. The performance of a derivative is derived by replicating the performance of… Read More


1. Expected loss is best calculated as: A. the product of loss severity and default probability. B. the sum of loss severity and default probability. C. the product of recovery rate and default probability.   2. A subordinated bondholder recovered some value in a bankruptcy without a senior creditor getting paid in full. The most… Read More


1. Which of the following statements is most likely correct? Statement 1: Securitization is beneficial for banks because it allows banks to maintain ownership of their securitized assets. Statement 2: Securitization is beneficial for banks because it increases the funds available for banks to lend. A. Statement 1. B. Statement 2. C. Neither of them.… Read More


1. Which of the following statements is the most accurate description of non-sovereign and quasi-government bonds? A. Non-sovereign bonds are issued by agencies that are owned or sponsored by governments. Quasi-government bonds are issued by local government authorities. B. Non-sovereign bonds are issued by companies. Quasi-government bonds are issued by supranational organizations. C. Non-sovereign bonds… Read More