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The longer the duration of a financial instrument, the higher its exposure to interest rate risk. This is because longer duration instruments are more sensitive to changes in interest rates, which can impact their value and returns.

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6mo ago

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Current status of philippine economy?

the status of our country is very complecatedThe Philippine economy seems comparatively well-equipped to weather the global financial crisis in the short term as a result of the efforts over the past few years to control the fiscal deficit, bring down debt ratios, and adopt internationally-accepted banking sector capital adequacy standards. The Philippine banking sector -- which comprises 80% of total financial system resources -- has limited direct exposure to distressed financial institutions overseas (i.e., $2 billion, less than 2 percent of aggregate banking system assets). Conservative regulatory policies, including the prohibition of investments in structured products, shielded the insurance sector from exposure to distressed financial firms. While direct financial exposure to problematic investments and financial institutions is limited, the impact of external shocks to economic growth, poverty alleviation, employment, remittances, credit availability, and overall investment prospects is a concern.The Philippines is still in the third world which means the economy is still not stable.


What is the 2008 bailout?

The 2008 bailout refers to a series of financial rescue measures implemented by the U.S. government in response to the financial crisis triggered by the collapse of major financial institutions, primarily due to exposure to subprime mortgages. The most significant action was the Troubled Asset Relief Program (TARP), which allocated $700 billion to purchase distressed assets and inject capital into banks to stabilize the financial system. This intervention aimed to restore confidence in the banking sector and prevent a complete economic collapse. Ultimately, TARP and other measures helped to stabilize the economy, although they sparked debate about government intervention and financial regulation.


What is the significance of mean preserving spread in the context of financial risk management?

Mean preserving spread is a concept in financial risk management that ensures the distribution of potential outcomes remains stable or improves when risk is added. This is important because it allows investors to increase their risk exposure without decreasing their expected return, helping to manage and mitigate potential losses in a more controlled manner.


What is the importance of treasury management under harsh economic conditions?

Treasury management involves the process of managing the cash, investments and other financial assets of the business. The goal of these activities is to optimize current and medium-term liquidity and make solid financial decisions involving invested and investable assets. Treasury management also includes hedging where needed to reduce financial risk exposure. Treasury management's functions include: - Cash Flow Management - Float - Relationships and Risks - Information Sharing


How credit derivatives take part in global crisis?

Credit derivatives, such as credit default swaps, can amplify financial crises by allowing institutions to take on excessive risk without fully understanding their exposure. During the 2008 financial crisis, these instruments contributed to the collapse of major financial institutions, as they were often used to insure against defaults on mortgage-backed securities. The lack of transparency and regulation in the credit derivatives market further exacerbated the crisis, leading to a loss of investor confidence and a systemic downturn in the global economy. Ultimately, their misuse highlighted the interconnectedness of global financial systems and the potential for localized failures to trigger widespread turmoil.

Related Questions

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The duration of Maximum Exposure is 3600.0 seconds.


What is the duration of Maximum Exposure?

The duration of Maximum Exposure is 3600.0 seconds.


What is the duration of Exposure of a Dream?

The duration of Exposure of a Dream is 2700.0 seconds.


What is the duration of Daffy's Southern Exposure?

The duration of Daffy's Southern Exposure is 420.0 seconds.


How do you calculate financial exposure?

Financial exposure is the maximum amount of money you can loose on a certain investment. financial exposure = financial position * price e.g if you have 100 shares of ABC at $10 each your financial position = 100 and your financial exposure = 100*10 = $ 1000


What is the duration of Northern Exposure?

The duration of Northern Exposure is 2700.0 seconds.


What is the difference between risk and exposure?

An exposure consist of the potential financial effect of an event multiplied by its probability of occurrence and risk is with probability of occurrence. Thus an exposure is a risk times its financial consequences.


What is your loan exposure with financial institutions?

risky


What is exposure in epidemiology?

In epidemiology, exposure refers to the contact individuals have with a potential risk factor or agent that may influence their health. This can include environmental factors, lifestyle choices, infectious agents, or chemical substances. Researchers study exposure to determine its relationship with health outcomes, such as diseases or conditions, often assessing the duration, intensity, and timing of the exposure. Understanding exposure is crucial for identifying causal links and developing effective public health interventions.


Indentify a disadvantage of shelter in place?

Its protection diminshes with the duration of the exposure


Identify a disadvantage of shelter in-place?

Its protection diminishes with the duration of the exposure.


Identify a disadvantage of shelter in place?

its protection diminishes with the duration of the exposure