Liquidity and Leverage von Edu Pristine

Dozent des Vortrages Liquidity and Leverage

Edu Pristine

Trusted by Fortune 500 Companies and 10,000 Students from 40+ countries across the globe, EduPristine is one of the leading International Training providers for Finance Certifications like FRM®, CFA®, PRM®, Business Analytics, HR Analytics, Financial Modeling, Operational Risk Modeling etc. It was founded by industry professionals who have worked in the area of investment banking and private equity in organizations such as Goldman Sachs, Crisil - A Standard & Poors Company, Standard Chartered and Accenture.

EduPristine has conducted corporate training for various leading corporations and colleges like JP Morgan, Bank of America, Ernst & Young, Accenture, HSBC, IIM C, NUS Singapore etc. EduPristine has conducted more than 500,000 man-hours of quality training in finance.
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... by which a fractional-reserve bank engages in asset liability management. Describe issues related to systematic funding liquidity risk with respect to LBOs, merger arbitrage hedge funds, and convertible arbitrage hedge funds. Explain specific liquidity issues faced by money market mutual funds. Describe the economics ...

... liquidated over a number of trading days. Define characteristics used to measure market liquidity, including tightness, depth and resiliency. Explain the challenges posed by ...

... the price of the asset will move adversely when the asset is bought or sold. Funding liquidity risk is the risk that the creditors will ...

... simultaneously, then the event is called a bank run. No asset-liability management system can protect a fractional-reserve bank against a general loss of confidence in its ability to pay out depositors. This problem can be mitigated through higher ...

... Many leveraged loans became part of CLO pools, and tranches of CLOs were important in CDO pools. The funding liquidity risk in corporate transactions is both idiosyncratic and systematic. Funding conditions can change ...

... the remaining gap between the current and announced prices. The main risk arises from the uncertainty whether the transaction will close or not. ...

... Many hedge funds traders and traders dependent on credit extended by broker-dealers, take advantage of this gap to earn excess returns. The strategy is only attractive with leverage. But this strategy has a systematic extreme-loss risk. ...

... in value, This limits the ability to offer unlimited instantaneous withdrawals if assets fall in value. MMMFs can also face a situation like run on the bank. If a large number of shareholders attempt to redeem their shares ...

... providing security for lenders and thus ensuring the availability of credit to borrowers. The role of collateral has changed due to development of securitization, with the growing volume and transactions ...

... by one of the counterparties. Broker retains the custody of the securities but in the street's name and not in the name of the owner. This makes it simple for the broker to ...

... forward repurchase of a security. Both the spot and forward price are agreed in the beginning and the difference between them implies an interest rate. The collateral for this ...

... flows from the security. This transaction is structured as a sale and lender retains the collateral. Lender can ...

... fixed fee and receives the total return on a specified equity position on the other. TRS are OTC derivatives. ...

... in the following relationship: - Differentiating the above equation with respect to L, we get ...

... shares worth $100. They will use $50 from their cash and take margin loan of $50 to acquire these shares. ...

... there is always a risk of price rise. Company must therefore in addition put up margin of $50 16 Initial Balance Sheet of company Assets Liabilities Cash $100 Equity $100 Debt 0 Initial Leverage Ratio ...

... to buy or sell an asset without moving its price. Transaction liquidity risk is due to multiple factors like the cost ...

... an estimate of the next-day asset midprice. ...

... is the number of trading days required for orderly liquidation of position. Let us assume that the position has to be liquidated in equal ...

... the market adversely. Resiliency is the length of time for which a lumpy order moves the market away from the equilibrium price. Market Liquidity ...

... time of redemptions. They must liquidate some positions in order to meet redemptions. Suppose they liquidate those with the smallest adverse price impact first, but redemptions continue. The fund ...