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Emergency Cash Overnight
If one variable rises then so does the other and the ratio of the rise or fall remains constant. This is an area we will revisit when we look at “non-performing loans” (NPLs) in more detail in Chapter 13 “Managing credit risk” and Chapter 20 “Corporate failures and problem loans”. Emergency Cash Overnight. If on the other hand the stock price falls to $80 we would exercise the put option, deliver the stock we hold and receive $100, used to pay off the funds borrowed. The yield at four and a half years might be inferred from yields on bonds with a remaining term of four and five years, for example. Emergency Cash Overnight. Most bonds pay their coupon on a semi-annual basis, twice a year, rather than an annual basis. Three of these four factors are well defined and can be measured with a high degree of certainty. Emergency Cash Overnight.
