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on 30-Jan-2015 (Fri)

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#asset-swap #finance #gale-using-and-tradning-asset-swaps
The result of using MVA asset swap as opposed to par/par is that the counterparty exposure is switched from the seller taking the exposure to the buyer taking the exposure - the buyer will get 100 for bond redemption and, given that the swap was on full dirty price of a bond, he will get P-100 from the swap dealer (so the buyer waits for money back, taking the exposure).

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#economics #money
the Basel capital requirement rules are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the deposit.

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Mark Wadsworth: Banking made easy
realise what money is, namely the physical or electronic record of who owes whom how much; 'money' is a liability as much as it is an asset; you can only have cash in the bank if somebody somewhere owes the bank money.12. As a final thought: <span>the Basel capital requirement rules (see para 4 and 5 above) are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the deposit.I hope that clears things up a bit!* I'm using "a tenth" for illustration purposes only, it's a bit more complicated than that. My latest blogpost: Banking made easy




#asset-swap #finance #gale-using-and-tradning-asset-swaps
The CDS premium is typically paid quarterly.

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Flashcard 149664878

Tags
#lifeintheuk #lifeintheuk3ed #lifeintheuk3ed-new-residents
Question
England’s only international tournament victory in football was at the World Cup of [year?], hosted in the UK.
Answer
1966


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England’s only international tournament victory in football was at the World Cup of 1966, hosted in the UK.

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Flashcard 149669171

Tags
#asset-swap #finance #gale-using-and-tradning-asset-swaps
Question
The CDS premium is typically paid [frequency?].
Answer
quarterly


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The CDS premium is typically paid quarterly.

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Flashcard 149669184

Tags
#finance #steiner-mastering-financial-calculations-3ed
Question
a "flat" short-term yield curve - in our example, the 3-month and 6-month rates are the same at 10.0% - does it imply that the market expects interest rates to remain stable?
Answer
No, it implies the market expects rates to fall (geometric average, reinvestment; also rate compounded twice has to be smaller than equivalent non-compounded rate over the same period). In other words, 6 month is equivalent to 3 months from now (known) and next 3 months unknown. for this compounding to work out to 10%, next 3 months (unknown) must be lower than 10%.


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a "flat" short-term yield curve - in our example, the 3-month and 6-month rates are the same at 10.0% - does not imply that the market expects interest rates to remain stable. Rather, it expects them to fall.

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Flashcard 149669203

Tags
#economics #money
Question
n the [...] view of banking regulation (or self-regulation), we look at the assets side: as long as the bank has a tenth* of its assets in liquid form (i.e. gold coins in the safe), it will probably do OK.
Answer
old fashioned


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n the old fashioned view of banking regulation (or self-regulation), we look at the assets side: as long as the bank has a tenth* of its assets in liquid form (i.e. gold coins in the safe), it will probably

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Mark Wadsworth: Banking made easy
set.2. The traditional books explain how banks started off using 'fractional reserve banking', i.e. they take 100 gold coins as deposits and lend out 90 of them, keeping 10 in the safe in case depositors come round to make a withdrawal.3. So i<span>n the old fashioned view of banking regulation (or self-regulation), we look at the assets side: as long as the bank has a tenth* of its assets in liquid form (i.e. gold coins in the safe), it will probably do OK.4. The modern view of banking regulation (i.e. Basel rules), we look at the liabilities side, and say that share capital (a non-repayable liability or source of finance) should be at lea







Flashcard 149669210

Tags
#economics #money
Question
n the old fashioned view of banking regulation (or self-regulation), we look at the [...] side: as long as the bank has a tenth* of its [...] in liquid form (i.e. gold coins in the safe), it will probably do OK.
Answer
assets


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n the old fashioned view of banking regulation (or self-regulation), we look at the assets side: as long as the bank has a tenth* of its assets in liquid form (i.e. gold coins in the safe), it will probably do OK.

Original toplevel document

Mark Wadsworth: Banking made easy
set.2. The traditional books explain how banks started off using 'fractional reserve banking', i.e. they take 100 gold coins as deposits and lend out 90 of them, keeping 10 in the safe in case depositors come round to make a withdrawal.3. So i<span>n the old fashioned view of banking regulation (or self-regulation), we look at the assets side: as long as the bank has a tenth* of its assets in liquid form (i.e. gold coins in the safe), it will probably do OK.4. The modern view of banking regulation (i.e. Basel rules), we look at the liabilities side, and say that share capital (a non-repayable liability or source of finance) should be at lea







Flashcard 149669227

Tags
#economics #money
Question
the Basel capital requirement rules are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the [...] or the deposit.
Answer
mortgage loan


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ying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the <span>mortgage loan or the deposit.<span><body><html>

Original toplevel document

Mark Wadsworth: Banking made easy
realise what money is, namely the physical or electronic record of who owes whom how much; 'money' is a liability as much as it is an asset; you can only have cash in the bank if somebody somewhere owes the bank money.12. As a final thought: <span>the Basel capital requirement rules (see para 4 and 5 above) are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the deposit.I hope that clears things up a bit!* I'm using "a tenth" for illustration purposes only, it's a bit more complicated than that. My latest blogpost: Banking made easy







Flashcard 149669234

Tags
#economics #money
Question
the Basel capital requirement rules are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the [...].
Answer
deposit


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that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the <span>deposit.<span><body><html>

Original toplevel document

Mark Wadsworth: Banking made easy
realise what money is, namely the physical or electronic record of who owes whom how much; 'money' is a liability as much as it is an asset; you can only have cash in the bank if somebody somewhere owes the bank money.12. As a final thought: <span>the Basel capital requirement rules (see para 4 and 5 above) are of very limited use in preventing credit bubbles. All the banks would have to do is tell the vendors who arrive in their branches brandishing cheques for £100,000 that their deposit accounts are only paying 3% interest and that they would do better to subcribe for new shares in the bank, which pay 5% or 10% (in the good years). Shares in a bank are just a slightly different kind of 'money', but can be created out of thin air the same as the mortgage loan or the deposit.I hope that clears things up a bit!* I'm using "a tenth" for illustration purposes only, it's a bit more complicated than that. My latest blogpost: Banking made easy







Flashcard 149669256

Tags
#finance #inflation #inflation-derivatives #inflation-derivatives-barcap
Question
compounded fixed rate paid at the maturity of the zero coupon inflation swap formula is
Answer
\(\Large notional [(1 + fixedrate)^{tenor} - 1]\)


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compounded fixed rate paid at the maturity of the zero coupon inflation swap formula is notional[(1+fixedrate)tenor−1]

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Flashcard 149669271

Tags
#finance #inflation #inflation-derivatives #inflation-derivatives-barcap
Question
the payment of the cumulative percentage in the price index over the tenor of the zero coupon inflation swap formula is
Answer
\(\Large notional(\frac{InflationIndex_{i+tenor}}{InflationIndex_i}-1)\)


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the payment of the cumulative percrentage in the price index over the tenor of the zero coupon inflation swap formula is notional(InflationIndexi+tenorInflationIndexi−1)

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Flashcard 149669285

Tags
#asset-swap #finance #gale-using-and-tradning-asset-swaps
Question
In yield accrete asset swap methodology, because the swap is at [...], collateralisation does not complicate the transaction.
Answer
market (no upfront or maturity payments)


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In yield accrete asset swap methodology, because the swap is at market, collateralisation does not complicate the transaction.

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Flashcard 149669293

Tags
#finance #steiner-mastering-financial-calculations-3ed
Question
A forward-forward is a [...]. The term, amount and interest rate are all fixed in advance.
Answer
cash borrowing or deposit which starts on one forward date and ends on another forward date


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A forward-forward is a cash borrowing or deposit which starts on one forward date and ends on another forward date. The term, amount and interest rate are all fixed in advance.

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Flashcard 149669301

Tags
#finance #steiner-mastering-financial-calculations-3ed
Question
Dates for FRAs in GBP are based on [...].
Answer
today


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Dates for FRAs in GBP are based on today.

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Flashcard 149669308

Tags
#finance #steiner-mastering-financial-calculations-3ed
Question
Dates for FRAs traded internationally in currencies other than GBP are generally based on [...].
Answer
spot


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Dates for FRAs traded internationally in currencies other than GBP are generally based on spot.

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