Risky Credit Suisse Bonds Quoted at Just Above Zero

Risky Credit Suisse Bonds Quoted at Just Above Zero

Assessment

Interactive Video

Business

University

Hard

Created by

Quizizz Content

FREE Resource

The transcript discusses the market's reaction to FINMA's decision to wipe out 16 billion francs worth of bonds, which caused shockwaves. Despite this, traders are buying and selling these bonds at a fraction of their value, anticipating potential claims against Credit Suisse. The UBS-Credit Suisse merger is also examined, highlighting market uncertainty, paused share buybacks, and the need to divest non-core assets. The merger's long-term benefits are debated, with S&P lowering the bank's outlook due to execution risks.

Read more

5 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What was the market's reaction to FINMA's decision to eliminate 16 billion francs worth of bonds?

The bonds were immediately valued at zero.

Traders continued to trade the bonds at a fraction of their value.

Traders stopped trading the bonds entirely.

The bonds increased in value unexpectedly.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why are traders still interested in bonds that are supposed to be worth zero?

They believe the bonds will increase in value soon.

They anticipate potential claims against Credit Suisse.

They are using the bonds for tax purposes.

They are required to hold these bonds by regulation.

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the expected timeline for the closure of the deal involving the bonds?

Indefinitely postponed

A few weeks

Several months

A year

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How did the market initially react to the UBS and Credit Suisse merger?

UBS shares remained stable.

UBS shares initially dropped, then rose slightly.

UBS shares were unaffected by the news.

UBS shares consistently increased.

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What challenge does UBS face following the merger with Credit Suisse?

Integrating Credit Suisse's investment banking business

Increasing the value of Credit Suisse's bonds

Reducing the number of employees

Expanding into new markets