Discuss market efficiency in responding to potential


1. Show that investing in a risky (credit-sensitive) bond is equivalent to investing in a risk-free bond plus selling a credit default swap

2. Discuss market efficiency in responding to potential earnings management?

3. The standard VaR calculation for extension to multiple periods assumes that positions are fixed. Explain this claim. If risk management enforces loss limits, will the true VaR be greater or less than calculated?

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Financial Management: Discuss market efficiency in responding to potential
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