This website uses cookies to ensure you have the best experience. Learn more

Introduction To Derivative Securities Essay

256 words - 2 pages

Assignment 1 [Due 11 September 2015, 4pm]
Assignment should be submitted in the box 402-512 by the due date.
Penalty will apply for late submission

The six month and one-year rates are 3% and 4% per annum with semi-annual compounding. Is 3.90% or 3.95% or 3.99% closest to the one-year par yield expressed with semi-annual compounding? (3 ...view middle of the document...

The initial margin is $4,000 and the maintenance margin is $3,000. Explain what is the futures price per unit above which there will be a margin call? (3 marks)

The spot price of an investment asset is $30 and the risk-free rate for all maturities is 10% with continuous compounding. The asset provides an income of $2 at the end of the first year and at the end of the second year. What is the three-year forward price? (2 mark)

On March 1 a commodity’s spot price is $60 and its August futures price is $59. On July 1 the spot price is $64 and the August futures price is $63.50. A company entered into futures contracts on March 1 to hedge its purchase of the commodity on July 1. It closed out its position on July 1. What is the effective price (after taking account of hedging) paid by the company? (2 marks)


Other Papers Like Introduction To Derivative Securities

Finance Description Essay

3207 words - 13 pages FINANCE 305 : ESSENTIALS OF INVESTMENTS CHAPTER 1: Investments: Background and Issues. REAL ASSETS – assets used to produce goods and services. FINANCIAL ASSETS – claims on real assets or income generated by them. FIXED INCOME (DEBD) SECURITIES – are securities that pay a specified cash flow over and specific period. EQUITY – an ownership share in a corporation. DERIVATIVE SECURITIES – securities providing pay offs that depend on the

Ytdfutddu Essay

1524 words - 7 pages trading, compression of settlement cycles, dematerialisation and electronic transfer of securities, securities lending and borrowing, professionalisation of trading members, fine-tuned risk management systems, emergence of clearing corporations to assume counterparty risks, market of debt and derivative instruments and intensive use of information technology. Our Mission NSE's mission is setting the agenda for change in the securities markets in


6600 words - 27 pages underdevelopment 13 10. Opportunities of Bangladesh Capital Market 16 11. Recommendations & Conclusion 18 references Capital market OF Bangladesh 1. Introduction A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term

International Financial Markets

966 words - 4 pages or options trading results long party who is short. Because buying and selling the underlying assets of the derivative security, do not exchange, but could not find willing to lend their securities holder of the asset needs. 2. Exchange traded derivatives more liquidity and lower transaction costs than other assets. Because they have low credit risk, more liquid standardized terms and interest in the underlying assets are extensive. In

Initial Public Offerings Paper

916 words - 4 pages ). Basic finance: An introduction to financial institutions, investments, and management (10th ed.). Mason, OH: South-Western. (Grace) Qing Hao, Securities litigation, withdrawal risk and initial public offerings, Journal of Corporate Finance, Volume 17, Issue 3, June 2011, Pages 438-456, ISSN 0929-1199, Lee-Lee Chong, Xiao-Jun Chang, Siow-Hooi Tan, (2014) "Determinants of corporate foreign exchange risk hedging," Managerial Finance, Vol. 40 Iss: 2, pp.176 - 188

What Is Financial Market? Discuss The Components Of Financial Market?

1323 words - 6 pages and sold by the buyers and sellers respectively." Some of the salient features of financial market are: • Transparent pricing • Basic regulations on trading • Low transaction costs • Market determined prices of traded securities Basic Functions of Financial Market: Financial market has emerged as one of the biggest markets in the world. It is engaged in a wide range of activities that cater to a large group of people with diverse needs

A Day In The Life

895 words - 4 pages economic life but financial asset are redeemed once they mature. Most importantly financial asset do not require additional cost to keep them functional, where as to physical assets is subjective as there may always be a need for it to be repaired, maintained and upgraded from time to time. -Money markets versus capital markets On the basis of the maturity of the securities traded, an introduction to distinction between money and capital


2087 words - 9 pages Introduction Many factors influence the interest rate of a loan. The two greatest factors are the probability of the borrower paying back the loan; and, the “cost” of the money to the lender. As a rational entity, the lender aims to maximize its gain on its assets. When the lender makes a loan to a borrower, it reviews the current market price for money (interest rate). There are various benchmarks used by lenders to determine the market

Finance Hw Week 1

1600 words - 7 pages markets, derivative markets, money market, primary vs secondary markets, OTC market, third and fourth market, ect. o. How are secondary markets organized? The secondary market is where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The Securities and Exchange Commission (SEC) registers securities prior to their primary issuance, then they start trading in the secondary market on the New


908 words - 4 pages include: 1. Cash 2. Available for securities adjusted costs 3. Gross unrealized gain 4. Gross unrealized losses 5. Fair value of investment category 34.What method does it use to value Inventory? Answer: 35.What method(s) does it use to depreciate its assets? Answer: Straight line Method 36.Does it have any leased assets? If yes, describe them. Answer: The company has approximately 10.9 million square feet leased

A Study On Capital Market In Bangladesh

1070 words - 5 pages among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere. I worked there for three months and closely observed all the sector of Capital Market in Bangladesh and prepared this term paper report. In this report I have tried to emphasize to find out detailed of Capital Market in Bangladesh. This report is divided into six parts. The first part is introduction. The objective of the report is to get

Related Essays

Financial Institutions Essay

4021 words - 17 pages options have become very popular in India and Korea owing to considerable retail demand. Index options and futures are usually among the first products to be developed before options on individual securities are introduced. 3 -5- 5 derivative market regulations and reporting requirements limit the participation of institutional investors and their ability to hedge cash market exposures to interest rate and exchange rate volatility

Sdas Essay

3260 words - 14 pages LECTURE 7: BLACK–SCHOLES THEORY 1. Introduction: The Black–Scholes Model In 1973 Fisher Black and Myron Scholes ushered in the modern era of derivative securities with a seminal paper1 on the pricing and hedging of (European) call and put options. In this paper the famous Black-Scholes formula made its debut, and the Itˆ calculus was unleashed upon the world o 2 of finance. In this lecture we shall explain the Black-Scholes argument in

Derivative Markets In Asia Essay

1983 words - 8 pages exposes foreign exchange derivatives counterparties to credit risk. This has been the largest source of credit losses in derivative markets because of defaults on foreign currency forwards in East Asia and Russia; • The largest threat to financial market stability that did not directly involve foreign exchange exposure was the use of embedded derivatives, put options, in loan and bond debt contracts. These options on the debt principal enabled

United States Global Financial Crisis Essay

999 words - 4 pages ; Financial markets (stock exchanges and derivative markets) that experienced steep declines; Liquidity problems in equity funds and hedge funds; Devaluation of the assets underpinning insurance contracts and pension funds leading to concerns about the ability of these instruments to meet future obligations: Increased public debt public finance due to the provision of public funds to the financial services industry and other affected industries