1. Which of the following is (or are) not true about off-balance finance?
a. Investor is limited liability to project loss
b. Investor’s risk profile is less affected by the project
c. Project’s debt to equity ratio has to be lower than the investor’s debt to equity ratio
d. Securitization of project revenue is not allowed in off-balance financing.
2. Which of the following statements is most likely FALSE:
A. The constituents of a market weighted index like the SP500 have a momentum bias
B. If the financial sector outperforms global equity markets, the ASX 200 index (Australia) is more likely to outperform the SP500 index (US)
C. Disaggregating fixed income returns quantifies both parallel shifts (interest rate risk) and non-parallel shifts (yield curve risk) in the yield curve
D. When an index provider decides to rebalance the index, the weights of securities in the index change as some securities are deleted and new securities are added E. Disaggregating returns helps to explain relative performance vs. a relevant benchmark.