Already have an account? Get multiple benefits of using own account!
Login in your account..!
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
(a) The position of an agency that sells a callable coupon bond. We supposed that coupon bond has a maturity of 3 years and is callable only at the second year.
(b) The market thinks that the short term volatility reduces as FED's plans become clearer. The long term volatilities may perhaps increase because mortgage players hedge as FED cuts interest rates.
(c) A straddle is a long call as well as long put at the same strike price. The swaption long straddle is a long position in the swaptions which are described above. Its cash flow is displayed below
Therefore the traders take a long straddle position on the long dated swaptions and short straddle position on the short dated swaptions.
(d) If expectations are realized all positions would be in the money.
Trader has supposed a short position on short term volatility and short term volatility is lower. When this position is stopped it would be in the money. The trader as well has assumed a long position on the long term volatility and the long term volatility is higher therefore this position is in the money as well. Consequently the positions can simply be unwound.
(e) The investor is able to make money only if long term volatility increases in the case of CSFB. Where like in the case of Lehman even if long term volatility doesn't increase or even it reduce earnings from short-term volatility position would offset the losses.
Q. Yield curve - influence the rate of interest? The normal yield curve demonstrates that the yield required on debt increases in line with the term to maturity. One reason for
Explain the mechanism which restores the balance of payments equilibrium when it is disturbed under the gold standard. Answer: The adjustment mechanism within the gold standar
•What categories and in what amounts should Jenny allocate her funds to reflect a balanced monthly budget? Include the main categories as well as examples of other categories.
You have $20 to spend on high quality pens and low quality pens. High quality pens cost $5 each and low quality pens cost $2 each. (a) Suppose that you will spend your entire
Why would it be useful to examine a country’s balance of payments data? Answer: It would be helpful to observe a country’s BOP for at least two reasons. First, BOP offers detail
what course a decrease and increase in share price
Typically, there exist two types of bids in the treasury auction process. They are: Competitive bid and non-competitive bid. A non-competitiv
what is financial management?
Madhuban group manufactures a product. The following particulars are as follows: 5 Monthly demand 1000 units Cost of placing an order Rs. 100 Annual carrying cost per unit Rs. 15 N
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd