Which of the Following Are Normally Traded at Very Deep

question 1

Multiple Choice

Which of the following are normally traded at very deep discounts from 100 per cent?

• A) Restructured loans.
• B) Brady bonds.
• C) Sovereign bonds.
• D) Nonperforming loans.

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Definitions:

Foreign Currency Firm Commitments

Agreements to execute a financial transaction in a foreign currency at a future date, at a predetermined rate or price.

Cash Flow Hedge

A form of hedge accounting that aims to reduce the exposure to variability in cash flows related to a specific risk.

Foreign Currency Option

A financial derivative that gives the holder the right, but not the obligation, to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.

Fair Value

The cost at which one could sell an asset or assume a liability in a structured exchange with market participants on the valuation date.