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NEW QUESTION: 1
Carl Cramer is a recent hire at Derivatives Specialists Inc. (DSI), a small consulting firm that advises a variety of institutions on the management of credit risk. Some of DSI's clients are very familiar with risk management techniques whereas others are not. Cramer has been assigned the task of creating a handbook on credit risk, its possible impact, and its management. His immediate supervisor, Christine McNally, will assist Cramer in the creation of the handbook and will review it. Before she took a position at DSI, McNally advised banks and other institutions on the use of value-at-risk (VAR) as well as credit-at-risk (CAR).
Cramer's first task is to address the basic dimensions of credit risk. He states that the first dimension of credit risk is the probability of an event that will cause a loss. The second dimension of credit risk is the amount lost, which is a function of the dollar amount recovered when a loss event occurs. Cramer recalls the considerable difficulty he faced when transacting with Johnson Associates, a firm which defaulted on a contract with the Grich Company. Grich forced Johnson Associates into bankruptcy and Johnson Associates was declared in default of all its agreements. Unfortunately, DSI then had to wait until the bankruptcy court decided on all claims before it could settle the agreement with Johnson Associates.
McNally mentions that Cramer should include a statement about the time dimension of credit risk. She states that the two primary time dimensions of credit risk are current and future. Current credit risk relates to the possibility of default on current obligations, while future credit risk relates to potential default on future obligations. If a borrower defaults and claims bankruptcy, a creditor can file claims representing the face value of current obligations and the present value of future obligations. Cramer adds that combining current and potential credit risk analysis provides the firm's total credit risk exposure and that current credit risk is usually a reliable predictor of a borrower's potential credit risk.
As DSI has clients with a variety of forward contracts, Cramer then addresses the credit risks associated with forward agreements. Cramer states that long forward contracts gain in value when the market price of the underlying increases above the contract price. McNally encourages Cramer to include an example of credit risk and forward contracts in the handbook. She offers the following:
A forward contract sold by Palmer Securities has six months until the delivery date and a contract price of
50. The underlying asset has no cash flows or storage costs and is currently priced at 50. In the contract, no funds were exchanged upfront.
Cramer also describes how a client firm of DSI can control the credit risks in their derivatives transactions.
He writes that firms can make use of netting arrangements, create a special purpose vehicle, require collateral from counterparties, and require a mark-to-market provision. McNally adds that Cramer should include a discussion of some newer forms of credit protection in his handbook. McNally thinks credit derivatives represent an opportunity for DSL She believes that one type of credit derivative that should figure prominently in their handbook is total return swaps. She asserts that to purchase protection through a total return swap, the holder of a credit asset will agree to pass the total return on the asset to the protection seller (e.g., a swap dealer) in exchange for a single, fixed payment representing the discounted present value of expected cash flows from the asset.
A DSI client, Weaver Trading, has a bond that they are concerned will increase in credit risk. Weaver would like protection against this event in the form of a payment if the bond's yield spread increases beyond LIBOR plus 3%. Weaver Trading prefers a cash settlement.
Later that week, Cramer and McNally visit a client's headquarters and discuss the potential hedge of a bond issued by Cuellar Motors. Cuellar manufactures and markets specialty luxury motorcycles. The client is considering hedging the bond using a credit spread forward, because he is concerned that a downturn in the economy could result in a default on the Cuellar bond. The client holds $2,000,000 in par of the Cuellar bond and the bond's coupons are paid annually. The bond's current spread over the U.S. Treasury rate is
2.5%. The characteristics of the forward contract are shown below.
Information on the Credit Spread Forward

Of the following, determine which would most likely provide the best hedge desired by Weaver Trading.
A. Credit default swap.
B. Credit spread put option.
C. Credit spread call option.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
A credit spread call option will provide protection if the reference assets spread (at option maturity) over the relevant risk-free benchmark increases beyond the strike spread (here 3%). The increase in the spread beyond rhe strike spread (i.e., the option being in the money) constitures an identifiable credit event, in and of itself. These contracts may specify for the payoff to be delivery of a physical or a cash settlement.
Credit spread purs are analogous to protective puts. If the credit spread on an asset exceeds the reference spread, the put holder has the right to sell the asset to the pur writer at the price determined by the reference spread.
In a credit default swap, the protection buyer (i.e., the asscr holder) makes regular payments to rhe dealer and receives a payment when a specified credit event occurs. (Study Session 10, LOS 31.f)

NEW QUESTION: 2
A technician receives a report from a client that is having issues with colors on a monitor.
The technician notices that the monitor does not appear to have any red hues. The technician sees that the monitor has two types of inputs, VGA is currently in use, and the HDMI cable is not. The technician powers down the system and switches from using the VGA cable to the HDMI cable and the issue is resolved. Which of the following was MOST likely the issue?
A. The monitor did not natively support VGA input.
B. The PC was originally configured to output to HDMI.
C. One of the pins on the VGA cable was damaged.
D. The video card drivers were out of date.
Answer: C

NEW QUESTION: 3
A customer's data center has a Storwize V3700 and a Storwize V7000. Recently they added a DS3E524, The customer wants to implement a new manufacturing software solution on the DS3524 and utilize the IBM Real-time Compression (RtC) function.
Which statement is true regarding the DS3524 and RtC?
A. The DS3524 must have 4 SSDs installed and an activated RtC license.
B. The DS3524 must be virtualized behind the Storwize V7000.
C. The Storwize V3700 can perform RtC on the DS3524 when it isexternally virtualized.
D. The DS3524 performs RtC natively.
Answer: D

NEW QUESTION: 4
Azureサブスクリプションがあります。
Azure Resource Managerテンプレートを使用して、同じ可用性セットの一部となる50台のAzure仮想マシンを展開する予定です。
ファブリックに障害が発生した場合、またはサービス中に、できるだけ多くの仮想マシンを使用できるようにする必要があります。
テンプレートをどのように構成する必要がありますか?回答するには、回答エリアで適切なオプションを選択します。
注:各正しい選択には1ポイントの価値があります。

Answer:
Explanation:

Explanation:
Use two fault domains.
2 or 3 is max value, depending on which region you are in.
Use 20 for platformUpdateDomainCount
Increasing the update domain (platformUpdateDomainCount) helps with capacity and availability planning when the platform reboots nodes. A higher number for the pool (20 is max) means that fewer of their nodes in any given availability set would be rebooted at once.
References:
https://www.itprotoday.com/microsoft-azure/check-if-azure-region-supports-2-or-3-fault-domains-managed-disks
https://github.com/Azure/acs-engine/issues/1030


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