What is market risk-what way do commercial bank address risk

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1. Frontline has an annual EPS of $2.5. The stock has a beta of 2.2 and an expected return of 21%. Other companies in the same industry has an average P/E ratio of 7.0. What is the value of Frontline stock?

2. While the rest of OhBank’s credit team was intoxicated at the bank’s EOFY party, the junior intern left behind in the office gives a corporate loan of $70,000,000 to Dodgyaf Pty Ltd, which is an Australian firm a credit rating of C according to Moody’s. How many dollars of capital are required to support this corporate loan?

3. In the context of the Basel accords, what is market risk? How is it assessed and in what way do commercial banks address this risk?

Reference no: EM131934308

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