Terminal Warehouse Agreements

question 2

Multiple Choice

Terminal warehouse agreements

• A) are particularly useful where large bulky items are used as collateral.
• B) give the lender a lien against all inventories while only removing representative items.
• C) remove control of the inventory from the borrower.
• D) are less costly than field warehouse agreements.

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Definitions:

Par Value

The face value of a bond or the stock value stated in the corporate charter, often used in reference to bonds.

Immunization

A strategy used in fixed income to shield a portfolio from interest rate fluctuations by aligning the durations of assets and liabilities.

Duration Matching

Duration matching is an investment strategy used to minimize the interest rate risk by matching the duration of assets and liabilities, ensuring changes affect both sides similarly.

Yield Curve

A graph showing the relationship between bond yields and their maturity dates, commonly used to predict economic changes.