QUESTION 6

1. What is NOT a PROBLEM with the Duration Model of interest rate risk management?

   		Duration of assets and liabilities change with large change in rates and not necessarily by the same amount
   		Duration of assets and liabilities can change differently with the passage of time
   		It ignores the cost of duration matching.
   		Durations do not take into account call features.

3.5 points

QUESTION 7

1. Refinancing and Reinvestment risk are issues in interest rate risk managment that are identified in the repricing model. Which is worse from a liquidity risk and an insolvency risk perspective?

   		Refinancing risk
   		They are both the same
   		Reinvestment Risk

3.5 points

QUESTION 8

1. What does Altman's Z Score help with?

   		Provides timing signal on stock market
   		Valuing currency options
   		Signal potential credit problems
   		Identifies shifts in the Treasury yield curve