Management

✅ The correct answer is option C.
Agency cost can be decreased by Centralized Structure. Centralized organization can be defined as a hierarchy decision-making structure where all decisions and processes are handled strictly at the top or the executive level.

✅ The correct answer is option D.
Type of risk in which payments are interrupted by intervention of foreign governments is considered as country risk. Country risk is the risk that a foreign government will default on its bonds or other financial commitments. Country risk also refers to the broader notion of the degree to which political and economic unrest affect the securities of issuers doing business in a particular country.

✅ The correct answer is option A.
Agreement between two parties to exchange cash flows in future and cash flows are based on underlying instruments is classified as swaps. A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments.

✅ The correct answer is option C.
The activities of ADB include project financing and guaranteeing loans. ADB offers the public sector different types of financial products, which includes loans, grants, technical assistance, guarantees, and debt management products.

✅ The correct answer is option A.
Private placed stock and privately placed bonds are considered as most illiquid securities. Illiquid stocks are the ones which cannot be sold easily because they see limited trading.

✅ The correct answer is option B.
As compared to unsecured bonds, mortgage bonds are considered as less risky. Unsecured bonds or debentures are bonds that are not backed by some type of collateral. In other words, the bond is only secured by the bond issuer’s good credit standing. There are no building, equipment, vehicles, or other assets backing up the bond. A mortgage bond is a bond secured by a mortgage or pool of mortgages. These bonds are typically backed by real estate holdings and real property such as equipment. In a default situation, mortgage bondholders have a claim to the underlying property and could sell it off to compensate for the default.

✅ The correct answer is option A.
Ownership of mortgaged property will be transferred to financial institution if borrower defaults. The mortgaged property can be transferred/inherited only with the written consent of the lender. This means that if a person passes away while the home loan was still running on the property that has to be bequeathed, the beneficiary (spouse, or children of the deceased) will have to pay the outstanding loan.