Main reason of conducting an interest rate swap

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(a) If you have an option on a stock, how do you measure the price sensitivity of the option premium to the price of the stock? Would that sensitivity be positive or negative? Explain

(b) Do derivative securities provide leverage? Explain

(c) Briefly, enumerate the steps in a proper risk management process?

(d) What would you do if you buy a futures contract on oil and before two months from expiration, your expectations become opposite to those when you originally bought the futures contract?

(e) From an academic (and logical as well as practical) point of view, you cannot buy an asset on spot and, at the same time, selling it with a futures contract and make a sizable profit. Why this statement is true?

(f) What is the main reason of conducting an interest rate swap?

Reference no: EM132652927

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