"Futures Contract" Essays and Research Papers

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Corporate Finance Exam Questions

ANSWER 3. The current price of silver is $9 per ounce. The storage costs are $0.24 per ounce per year payable quarterly in advance. Assuming that interest rates are 10% per annum for all maturities, calculate the futures price of silver for delivery in nine months. (所有的FORWARD 和FUTURE 都用CONTINEOUS COMPONDING 算R) ANSWER 还有一种解法—练习本上 4. The current price of a stock is $20 and over the next three months it is expected to move up to $22 or down to $19. If the continuously compounded three month...

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Two-Step Tree and Butterfly Spread: Questions

1. A company enters into a short futures contract to sell $5000. The current future price is 250 cents per pound. The initial margin is $3000 and the maintenance margin is $2000. What price change would lead to a margin call? Under what circumstances $1500 could be withdrawn from the margin account? 2. Stock is expected to pay a dividend of Tk 10 per share in 2 months and again in 5 months. The stock price is Tk 500 and risk free rate of interest is 8% p.a. with continuously compounded for all...

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Corporate Finance: Quiz

Question 6. Question : (TCO F) Suppose the December CBOT Treasury bond futures contract has a quoted price of 80-07. What is the implied annual interest rate inherent in the futures contract?  Assume this contract is based on a 20-year Treasury bond with semiannual interest payments. The face value of the bond is $1,000, and the semiannual coupon payments are $30. The annual coupon rate on the bonds is $60 per bond (or 6%). The futures contract has 100 bonds. (a) 6.86% (b) 7.22% (c) 7.60% (d) 8.00% (e)...

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Stock Portfolio Paper Example

Active &Passive Portfolio – Call/Put Options and Futures This report will document the active traded portfolio held from Friday (July 18th, 2014) until Monday (August 11th, 2014). In this portfolio, the two portfolio managers traded call options and put option for the stocks on the S&P 500, as well as futures contracts in many different asset classes (commodities, currencies, indexes and so on). Trades were made at the end of each week and Monday (August 11, 2014), resulting in four trading days...

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Investment Ppt

Balanced Schemes • Debt Schemes • Regulation • Pros and Cons DMP-INVESTMENT MGT Financial Derivatives A derivative is an instruments whose value depends on the value of some underlying asset. Futures A futures contract is an agreement between two parties to exchange an asset for cash at a predetermined future date for a price that is specified today. Options An option gives its owner the right to buy or sell an underlying asset on or before a given date at a predetermined price. DMP-INVESTMENT MGT ...

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The Privatization of Rhône-Poulenc, 1993

it harder to persuade workers to buy shares but the successful privatization of RP can be used as a good example and stimulate further privatization. As for RP, the privatization will allow the company to access private capital necessary for future investments. RP strives to be efficient and to have a high employee motivation. The stock ownership will provide initiatives for employees to perform better, however, first it is necessary to overcome participation unwillingness in the privatization...

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Fall of Amaranth

more volatile than the market. This is a very risky move but could pay off very well in the future if the market moved accordingly. The managers were exploiting the difference between future delivery prices and purchasing put and call options that were way out of the money. This was their attempt to profit on market movements while keeping risk to an acceptable amount. By longing and shorting futures contracts of two related securities or commodities, Amaranth was able to capture the spread between...

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The Volcker Rule and its Effect on Oil Speculation

involved with proprietary trading. By making bets in exotic financial markets, proprietary trading, they are not really doing anything to support the economy but instead focusing on their own accounts. This habit tends to be risky and could lead to future government bailouts for these businesses deemed “too large to fail.” Ultimately, this Dodd-Frank reform was established to show that large corporations could either speculate on financial markets or have a government safety net; however, they cannot...

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Pine Street Capital

current scenario As S&P increases/ decreases, the option price decreases/ increases and accordingly the ROE figures change 10 LINEAR v/s NON LINEAR HEDGING Linear – Future Contracts – payoff function is linear - every one-tick movement translates directly into a specific dollar value per contract Non Linear – Option Contracts – payoff function is non-linear - payoff changes with time Delta Hedging - possible to capture gains from volatility by hedging a portion of the option's value - if you...

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The Role of Eurodollar Bond Issuance in Emerging Markets

trades on a European exchange. Other Eurodollar securities, such as Eurodollar bonds, pay investors in U.S. dollars but do not have to comply with SEC regulations. In 1981, the Chicago Mercantile Exchange began trading Eurodollar futures, which were the first futures contracts that did not require delivery of an underlying instrument but were instead settled in cash. The most important regulation that has stimulated the development of the Euro-dollar market has been regulation Q, under which the Federal...

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