The available options are:
A. I and III
B. I and IV
C. II and III
D. II and IV
Answer:
C. II and III
Explanation:
IO tranche which is an acronym for Interest Only tranche is defined as a form of tranche which earns interest only from a secured loan which is derived from Principal Only tranche.
However, Interest Only tranche is quite different from a typical bond, simply because when market interest rate increases the rate of prepayment decreases, which in turn makes the rate of maturity to be longer. Thereby when interest rates increase, prices increase, and vice versa.
Hence the true statements are:
II When interest rates rise, the price of the tranche rises
III When interest rates fall, the price of the tranche falls
Answer:
Correct answer is D.
$4375
Explanation:
Amortization of actuarial gain or losses = Net actuarial gain/remaining service life
= 87500/20
Amortization of actuarial gain = $4375
$500,000
Break even =(fixed costs - contribution margin)
Contribution margin is Price of item- variable costs ($1- 30 cents/per item=.7)
$350,000/.7 = $500,000
Answer:
Ponzi scheme
Explanation:
Ponzi scheme is a fraud investment strategy that promises to pay a substantial sum of returns. In a Ponzi scheme, generate income for the old investor by using the money of the newest investor and this chain goes on. This is basically a fraudulent scam or investment strategy to get a significant amount of money. Ponzi scheme is similar to pyramid strategy both are based on using new investor’s fund.