Final Flashcards
(30 cards)
CDS provide insurance against a default by a ___, where a default by the company is known as a ___.
Reference entity (could also be a sovereign entity), known as a credit event
The two primary tradable index families include: _ and _
Dow Jones CDX, Itraxx
CDS spreads may serve as a viable substitute for ___.
Credit ratings
The CBOE began trading CEBOs which stand for _, and has two possible outcomes, being:
Credit Event Binary Options, a payout of a fixed amount if a credit event occurs or nothing if a credit event does not occur.
Investors add commodities to their portfolios to hedge against _, and because of _.
Inflation, their low level of correlation with equity and fixed income returns
One thing that has lowered the deficit is a reduction in _.
Energy imports
After hitting a record low, traders can no longer assume that the dollar will _ against the Yuan.
Always fall
The majority of the carry trade is in the _.
Yen
Currency ETNs stand for _, and are _ debt instruments whose price fluctuates with _ and are subject to _.
Exchange Traded Notes, non-interest paying debt instruments, an underlying currency exchange rate, insolvency
The ECB defined “price stability” as ‘year on year increase in the _ for the euro area of below _’.
Harmonised Index of Consumer Prices HICP, below 2%
The ECB engaged in Securities _ _, which is buying _. Also Long-Term _ _, which lengthened the _.
Market Purchases (SMP), Refinancing Operations (LRTO), maturity of its liquidity funding
The Outright _ _ , stated that the ECB would buy _ amounts of sovereign debt up to three years in maturity.
Monetary Transactions (OMT), unlimited
FOREX market turnover is driven by: _ activity of _, more trading by _ banks, and the emergence of _.
Greater activity of high-frequency trades, smaller, retail investors
Prices of non-energy commodity futures in the US have become _ oil prices.
Increasingly correlated with
The two most active crude oil benchmarks are _ and _.
West Texas Intermediate (WTI) and Brent
The basic trading unit for carbon emissions in Europe is the _.
EUA European Union Allowance
CLOs are special purpose vehicles set up to hold and managed pools of _. A CDO stands for _ and is an arrangement that raises money by issuing _ and invests its proceeds in _. A CMO stands for , and is a multi-class _ with different bondholder classes or “”.
Leveraged loans, Collateralized Debt Obligation, in a portfolio of bonds, Collateralized Mortgage Obligation, pass-through, “tranches”
PAC bonds provide greater certainty because there is a _. Because they provide protection against both extension risk and contraction risk,
Principal repayment schedule that must be satisfied.
Fannie, Freddit and GNMA issue CMOs which are called_
Real Estate Mortgage Investment Conduits (REMICs)
The FHA stands for _ and was created to _. The FHA provides _ on loans made by FHA-approved lenders.
Federal Housing Administration, help spread home ownership in the US, mortgage insurance
The two primary factors in determining your
eligibility for an FHA mortgage are your _, the _ ratio and the _ ratio.
Credit score, payment to income ratio, and loan to value ratio
Both Fannie Mae and Freddie Mac have become _.
GSEs or Gov’t Sponsored Enterprises
GSEs do two things: they _ and _.
(1) They sell agency securities, backed implicitly (and now explicitly) by the federal government. (2) They use these proceeds to buy mortgages and create mortgage backed securities. This provides a subsidy to housing (along with favorable tax provisions like the deduction of mortgage interest).
WTI crude went into _ in June 08 and reached an _ in late Dec.
Contango, apex super contango
