Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
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!
Suppose you are asked to assist in the design of an equity-linked security. The instrument is a five-year zero coupon bond with a guaranteed return of 1 percent, compounded annually. At the end of five years the bond will pay an additional return based on any appreciation of the Nikkei 300 stock index, a measure of the performance of 300 Japanese stocks. The risk-free rate is 5.5 percent, com- pounded annually, and the volatility of the index is 15 percent. In addition the index pays a divi- dend of 1.7 percent continuously compounded. Presently the index is at 315.55 and the addi- tional return is based on appreciation above the current level of the index. You expect to sell these bonds in minimum increments of $100. Overall you expect to sell $10 million of these securities. Your firm has determined that it needs a margin of $175,000 in cash today to cover costs and earn a reasonable profit. Determine the percentage of the Nikkei return that your firm should offer to cover its costs. Your firm would then set the percentage offered at less than this. If your firm sells this security, comment on the risk it creates for itself and suggest how it might deal with that risk.
Text Book: Introduction to Derivatives and Risk Management By Don Chance, Roberts Brooks.
task ltbrgtthis is an individual assessment worth 50 of the module mark. word length 2500 words do not exceed word
What is the difference between operating cycle and cash cycle? How do the following changes in working capital terms affect the cash conversion cycle.
Can concentration risks be reduced via CDOs? Please elaborate. Explain distressed debt. Why do institutions prefer to sell distressed debt?
What is the asymptotic distribution of the minimal melting temperature of alloy A and what is the asymptotic distribution of the maximal melting temperature of alloy A?
Discuss the working capital requirements. Also explore the liquidity situation. What would be the working capital situation if the turnover doubles without change in the current terms of trade?
Construct a Stochastic Differential Equation for Y (t). Which value of w would make Y (t) a martingale and evaluate the variance V[Y (t)] and provide the distribution for the increment of Y (t). Does Y (t) keep the properties of the Brownian Motion..
Discuss and explain why one should apply caution when using financial ratios for analyzing a healthcare management's current financial position and future viability.
Explain what the CAPM and APT attempt to model. What are the main differences between these two asset pricing models?
Determine the future value at this RESP at Roland's age 17 and create a mutual fund portfolio with at least two different funds that is consistent with a growth objective and a long term investment horizon.
Calculate the VAR for the following situations: Use the analytical method and determine the VAR at a probability of 0.05 for a portfolio in which the standard deviation of annual returns is $2.5 million.
In this assignment, you will compare and evaluate risk management techniques from experts in the field. Go to the Ashford University Library and find one article by Dr. James Kallman
Take a walk around the major business neighbourhood in your home town or city and identify the major features of the working capital cycle of a few businesses
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd