User Account

All Pages

What is the reasoning-consideration behind choice

Assignment Help Finance Basics
Reference no: EM132615889

Scenario

Assume you are a financial consultant and one of your client is holding an equity portfolio. The value of the portfolio is $1.5 million currently and investing equally in the following 15 largest stocks listed at ASX: CBA, CSL, BHP, WBC, NAB, WES, ANZ, FMG, WOW, MQG, TLS, RIO, TCL, GMG, and COL. Your client is worried about the market risk in the next 6 months and seeking advice from you. At the same time, your client is also interested in index derivatives and wants to explore the investment opportunity in this type of products. 

https://www.asx.com.au/products/index-derivatives/types.htm - Index futures that were researched

Question 1

(Hedge Using Index Futures): Index futures can be used to remove the market risk from an equity portfolio. Based on your client's situation, provide your advice and explain how to use index futures to change or remove the exposure to market risk. The questions you need to address in your discussion can but not limited to the following questions:

(a) When you need to choose a futures contract, what underlying assets do you need to use? What is the reasoning/consideration behind your choice?

(b) Which maturity you need to choose? What is the reasoning/consideration behind your decision?

(c) What are the important information you need to collect in order to determine how many contracts you need?

Reference no: EM132615889

Questions Cloud

Description of tax items that are included in gross income : Description of tax items that are included in gross income. Analysis of the items that are excluded from gross income. explanation of concept of gross income
Explosion of financing opportunities : With reference to specific Kenyan companies that have used financing from foreign markets
Explain the value of psychotherapy treatments : Write a 3-4 pages detailed explanation of whether psychotherapy has a biological basis, and explain how culture, religion, and socioeconomics might influence.
What should be the amount of return of capital for Jack : The S corporation earned ordinary income of $12,000 in 2018. The corporation had no accumulated E & P. What should be the amount of return of capital for Jack
What is the reasoning-consideration behind choice : When you need to choose a futures contract, what underlying assets do you need to use? What is the reasoning/consideration behind your choice?
What should be the amount of capital gain for Ron : The S corporation earned ordinary income of $12,000 in 2018. The corporation had no accumulated E & P. What should be the amount of capital gain
Firms balance sheets and income statements : Assume a firm has a positive cash balance which is increasing annually. Why then is it important to analyze a statement of cash flows?
External environment impact magnolia brands : How will the components of the external environment impact Magnolia Brands' ability to realize their vision?
What factors are involved in shaping a child personality : Discuss in reference to concepts drawn from at least two theories of personality. What factors are involved in shaping a child's personality?

Reviews

Write a Review

Finance Basics Questions & Answers

  Define what is capital budget and how capital budget used

Question: Write a five paragraph essay with the title: Capital Budgeting. Define what is a Capital Budget. How is the Capital Budget used

  Primary difference between annual bond and a semiannual bond

Discuss the primary difference between an annual bond and a semiannual bond. Why do changes need to be made in finding the price of a semiannual bond versus an annual bond?

  What type of generation skipping transfer occurs

What type of generation skipping transfer occurs when daughter dies? (a) if grandfather had made additional gifts to his grandchildren in 2017 before he died.

  Extend the syntax-directed definition

The sernantics of expressions are as in C. That is. b: =c is an expression that assigns the value of c to b; the r-value of this expression is the same as that of c. Furthermore. a: = (b: =0) assigns the value of c to b and then to a.

  Topic in relation to a corporate environment

Describe the selected topic in relation to a corporate environment. Analyze the roles and responsibilities in making these decisions for the organization.

  11 households make four kinds of economic decisions suppose

1.1 households make four kinds of economic decisions. suppose you have two households with the same income. household a

  Which security has a higher effective annual interest rate

Which security has a higher effective annual interest rate?

  Calculate expected rates of return on the stocks

Calculate expected rates of return on the following stocks. The risk-free interest rate is 7%. "a. A stock whose return is uncorrelated with all three f

  Types of decisions are made by apple computer

Explain why Dell usually reacts more quickly and more substantially to pricing, product design, and advertising decisions made by Hewlett

  Estimate the profits that could be earned from strategy

Gemstone National Bank considers borrowing 10,600,000 million Singapore dollars in the interbank market and investing the funds in dollars for 60 days.

  Prepare a multi-step income statement

Prepare a multi-step income statement and a classified balance sheet in proper form using accrual accounting.

  Particular patron at a german brothel

Suppose a particular patron at a German brothel has the following willingness-to-pay schedule for services at the brothel, per session.

Free Assignment Quote

Assured A++ Grade

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd