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  3. part b 50%. briefly answer exactly four of the fol

Part B 50%. Briefly answer exactly four of the following six short-answer questions Briefly describe...

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Accounting

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Part B 50%. Briefly answer exactly four of the following six short-answer questions Briefly describe the following three theories of the term structure of interest rates: unbiased expectations theory liquidity premium theory, segmented markets hypothesis. Describe a standard forward rate agreement (FRA) and how it is used. Hint: you may wish to include the following terms: notional principal, forward rate and realized rate. You may also wish to reference the contractual payment formula as discussed in the lectures, which is given below: FRA Cash flow = P(rn)(T2-T)/(1+r(T2-T)) Describe the relationship between maintenance margin, initial margin, and daily settlement in futures contracts. Explain what is meant by a repurchase agreement in bond markets, including the terms counterparty risk, repo rate and repo haircut in the discussion. Compare the strengths and weaknesses of standard deviation, Value-at-Risk and Expected Shortfall as risk measures. Define daily trading volume and open interest for a futures contract, and how these two measures are related over time

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