Answer these 3 questions:
Q1) Governments around the world are attempting to prevent global warming increasing the temperature of the earth by more than 1.5-2.0 degrees. Some would say that rating investments on the basis of ESG scores may improve investment performance but will have little impact on reducing CO2 emissions.
i) Explain how the use of ESG ratings could help governments achieve their objective of reducing emissions.
ii) Explain also what aspects of the ESG rating process and also the process for allowing a bond to be described as “green” ( Both of these rating processes might be faulty) might hinder the potential benefit for climate change mitigation of ESG ratings and green bond certification as a result of lack of credibility. (Maximum Word count 800 words)
Q2) i) Present and explain the mechanics of the repo market.
ii) Describe repo specialness and explain why it is considered as a form of convenience yield.
iii) Provide examples and discuss why market makers, risk managers and central banks are interested in the repo market.(Maximum Word count 800 words)
Q3) Define the following types of financial risks: Liquidity, counterparty and basis risk. Briefly explain the main issues that should be considered when managing each of these risks.
Assume that you have been hired to work within a commodity trading team. illustrate which of the above risks you should be most concerned about and explain why. Suggest a method for measuring each one of these risks. (Maximum Word count 800 words)
Maximum word count 2400 words (800 words each question)
Please use 2-3 references per question so total maybe around 9 references. There is no need to write an introduction, conclusion all you have to do is answer the questions. Thank you. Please also ensure you can complete this paper within 12 hours.
