MAF101 Study Guide - Final Guide: Country Risk, United States Treasury Security, Market Price
Document Summary
Allows both lenders and borrowers to trade-off between different attributes (return, risk, liquidity, and timing of cash flows) of financial assets in order to achieve their desired portfolio structured needs. ), instruments (debt, equity, hybrid, derivatives) and markets (primary, secondary, money, capital etc. ). Equity = ordinary shares issued by a company which represent an ownership position for the holder. Debt = contractual claim to periodic interest payment or repayments of principal. Hybrids = combine elements of both debt and equity e. g. an instrument issued which makes periodic interest payments but also offers a future ownership entitlement (convertible notes, preference shares) Negotiable certificates of deposits (cds) paper issued by bank in its own name. A set of agreements which provides recommendations on banking regulations in regard to capital risk, market risk and operational risk. Capital adequacy standard: total capital must be at least 8% of risk weighted assets. Required capital = amount ($) x risk weighted assets (%) x car (8%)
