Reference no: EM1343716
1. The derivatives market is complex because derivative buying and selling includes many things like financial contracts, including debt and structured debts and deposits, swaps, other obligations, futures, options, floors, caps, and forwards, and various combinations of these. Reporting may be hard to understand because derivatives are often forward looking and there can be many parts to the statement. They also have no real value themselves.
To improve the methods for valuing derivatives so that the reporting becomes more transparent. make the value of these available as soon as they change on financial websites open to the public.
Question: Don't we have useful models for valuing derivatives?
2. Since options have no value, there is no way one can truly figure out his Alpha or Beta number for risk. The standard deviation model needs to be modified to allow for derivatives (based on type, contract length and how purchased). This could help calculate a more correct estimate of portfolio risk.
One of the circumstances is based on structured debt (bonds) during times of interest rates rising will likely lose value, so this is risk. Put based in an account of a young investor with not too much equity before a market/stock(s) rally if the derivative is covered or uncovered. That will decrease the risk.
Question: Isn't an options risk already measured by its volatility? Is the answer perhaps to adjust for leverage in the portfolio? Isn't portfolio insurance (buying puts) a rather expensive long-term strategy?
|
Evaluating the vulnerability
: Estimate the vulnerability of each company to external forces such as a recession, higher interest rates, & global competition.
|
|
Discuss demand curve for wheat
: "The cost of a bushel of wheat, which was $3.00 last month, is $3.70 today. The demand curve for wheat must have shifted rightward in last month and today." Discuss
|
|
Explain role of market efficiency in underpricing theories
: One method utilized by corporation to obtain the long-term capital necessary to run & grow their businesses is by providing the general public with the option to buy stocks.
|
|
Difference between daily and annual compounding
: Compute difference between daily and annual compounding, given the following data: (a) PV: $52,000, (b) NPER: 30, and (c) RATE: 10%.
|
|
The derivatives market
: The derivatives market is complex because derivative purchasing and selling includes many things like financial contracts, including debt and structured debts & deposits, futures, options, floors, swaps, other obligations, caps, & forwards, and vari..
|
|
Calculate total variable costs of the project
: A firm is reviewing a project with labor cost of dollar 9.90 per unit, raw materials cost of $22.63 a unit, and fixed costs of dollar 8,000 a month. Sales are projected at 10,000 units over the three-month life of the project.
|
|
Underpricing the efficient market hypothesis
: Most initial public offerings (IPO) are made with assistance of an investment banker. Main activity of an investment banker is underwriting the issue.
|
|
Calculate maximum price for a non-constant growth stock
: Calculate maximum price that you would be willing to pay for a non-constant growth stock that has the following characteristics;
|
|
Explain main aspects of regulatory environment
: Explain main aspects of the regulatory environment which will protect the public from fraud within corporations. Pay particular attention to SOX needs.
|