Which one of the following four options correctly identifies the core difference between bonds and loans?

A. These instruments receive a different legal treatment.

B. These instruments have different pricing drivers.

C. These instruments cannot be used to estimate credit capital under provisions of the Basel II Accord.

D. These instruments are subject to different credit counterparty regulations.

Which one of the following four statements about the relationship between exchange rates and option values is correct?

A. As the dollar appreciates relative to the pound, the right to buy dollars at a fixed pound exchange rate decreases.

B. As the dollar appreciates relative to the pound, the right to buy dollars at a fixed pound exchange rate increases.

C. As the dollar depreciates relative to the pound, the right to buy dollars at a fixed pound exchange rate increases.

D. As the dollar appreciates relative to the pound, the right to sell dollars at a fixed pound exchange rate increases.

A large multinational bank is concerned that their duration measures may not be accurate since the yield curve shifts are not parallel. Which of the following statements would be typically observed regarding variability of interest rates?

A. Short-term rates are more variable than long-term rates.

B. Short-term rates are less variable than long-term rates.

C. Short-term rates are equally variable as long-term rates.

D. Short-term rates and long-term rates always move in opposite directions.

Which of the following statements are reasons for mathematical valuation and risk assessment models to be misleading or inaccurate?

A. There could be missing factors in models.

II. The data used as input for the model could be bad or wrong.

III. Model results could be misinterpreted.

IV. There could be errors in the derivation of the model.

B. I, II, III IV

C. III and IV

D. I, II, and III

E. I, III, and IV

What is the order in which creditors and shareholders get repaid in the event of a bank liquidation?

A. Depositors, shareholders, debt holders.

B. Debt holders, depositors, shareholders.

C. Depositors, debt holders, shareholders.

D. Depositors, shareholders, depositors.