Reference no: EM131067596 , Length: word count:1750

Derivative Securities Assignment-

This is an individual assignment report.

Purpose: The purpose of this assignment is to give you the opportunity to more fully understand the uses of derivative securities. By objectively undertaking this assignment, you will be aware of the practical uses of derivative securities to assist in hedging the day-to-day activities of corporations.

To allow students to demonstrate their research and information assimilation capabilities on a topic directly related to developing investment strategies using derivative instruments.

Content: You have heard that derivatives can hedge many of the variables which are affect the bottom line figure of your corporation but which you generally have no control over and which are not in the line of the business of the corporation. You therefore must devise strategies involving exchange traded derivative securities to control for potential adverse movements in these variables.

Part I: Choose any 2 major corporations and relate them together (EG: BHP, RIO, QANTAS, CBA, WESTPAC) Describe briefly the activities of these corporations and some of the main risks that they face. Tailor this description of risks to what you expect to discuss in Part II.

Part II: Describe strategies which would involve the use of derivatives contracts to control for some of the risks described above. In describing these strategies, refer to specific derivative contracts and the specific exchanges they are traded on. Also, discuss the advantages and any limitations of your strategies.

Form:

1. The assignment is expected to be submitted in report form. A complete list of references is required.

2. The report must be no longer than 1500-1750 words

3. The assignment should be typed in a 12 point Times Roman font, double spaced and with normal margins. The report should be spell-checked and proof-read.

4. Wherever possible, statements should be substantiated with references. Avoid generalisations and always credit a source.

Reference: https://www.investopedia.com/articles/stocks/04/122204.asp.

1750 words.

7 references.