Which of the Following Is True

question 8

Multiple Choice

Which of the following is true?

• A) Cash flow mapping is a way of calculating the present value of cash flows
• B) Cash flow mapping is used to handle interest rate exposures in the model building approach
• C) Cash flow mapping is used to handle interest rate exposures in the historical simulation approach
• D) None of the above

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Definitions:

Coupon Rate

The annual interest yield on a bond, displayed as a percentage of its principal value.

Tax Rate

The scale at which the government levies taxes on the financial gains of individuals or corporations.

Face Value

The nominal value printed on a bond or other financial instrument; it is the amount paid to the holder at maturity, though the market value can differ.