Donat Bank from Slovenia recently started trading in FX options: Senior management wants to receive reports about risks arising from those trading activities and wants from its risk management unit explanations regarding the techniques used to measure risk. Which technique(s) is (are) most appropriate in this case? A B C D Delta normal Full revaluation Both A and B None of the above

Donat Bank from Slovenia recently started trading in FX options: Senior management wants to receive reports about risks arising from those trading activities and wants from its risk management unit explanations regarding the techniques used to measure risk. Which technique(s) is (are) most appropriate in this case? A B C D Delta normal Full revaluation Both A and B None of the above

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question 2 (a) Evaluate the following statement: "Two stocks should be viewed as equally risky because they have the same standard deviation." (b) Suppose that the relevant equilibrium model is the CAPM with unlimited borrowing and lending at a riskless rate of interest. Assuming, you discovered a security that was located below the security market line. (i) What would you conclude about the pricing of this particular security? (ii) Describe any changes you would expect to occur in its price. (c) Suppose that the relevant equilibrium model is CAPM with unlimited borrowing and lending at a riskless rate of interest. Compute the missing values (a*, b*, c*, d*, e*) in the following table, showing all intermediate steps. Expected Standard Residual Variance Asset Return Deviation Beta A 0.1 a* 0 B b* 2 0.49 C d* 1 0 D e* 0 0.36 0.08 0.12 c* 0.05
Statement 1: Fundamental analysis is a method of forecasting future price movements of a security based onpolitical, environmental and other specific factorsStatement 2: Fundamental analysis is a method that study the past market data such as prices and volumeStatement 3: Fundamental analysis generally uses top down approachStatement 4: Fundamental analysis views from the chart and afterwards reviews the company, industry, financialmarkets, economy, and the conditions affecting the security.Statement 5: Fundamental analysis can be best employed for short-term trading because data can be easilyutilized and come out periodically a. Only statements 1 and 3 are correct b. Only statements 2 and 4 are correct c. Only statements 1 and 2 are correct d. Only statements 3 and 4 are correct
A bank seeding to avoid lower than expected yields from loans and security investments is most likely to use: OA short position or selling hedge in futures. O Along position or buying hedge in futures. O Along position in put option on futures contracts. OA long position or buying hedge in futures and a long position in put option on futures contracts. O None of the options are correct. D
Mark for Review Question 6 of 30: Which is not the types of foreign risk Default risk Price risk Sovereign risk transactional risk http/test
You are a proprietary trader under the FX Group of BDO Treasury Department. Due to the political and economic uncertainties that is happening in the Euro zone and the improving economic conditions in the US, you are bearish on the EUR and bullish on the USD. Given this view, you want to short the EUR and take a net FX position of EUR 100MM. At what rate can you establish your position, assuming the market rate prevails at EUR/USD: 1.3223-1.3227 1.3227 Do not enter the transaction because of the political and economic uncertainties in the Eurozone. 1.3223 Based on the above position/view, w/c of the following outcomes, 1 week from now, will yield you FX gains? Scenario A: at EUR/USD 1.3245 – 1.3249 Scenario B: at EUR/USD 1.3230 – 1.3234 Scenario C: at EUR/USD 1.3216 – 1.3220 How many pips will you make assuming you bought the EUR back and that the desired scenario happens? 11 pips 7 pips 3 pips What is your profit is USD? $110,000.00 $80,000.00 $30,000.00
Which of the following statements about European option contracts is TRUE? a. Typically American options are cheaper than otherwise similar European options due to the uncertainty regarding the date of exercise. b. One can synthesise a long forward position in the underlying by being long a call and short a put c. A long call position and a short put position both involve buying the underlying and so are equivalent d. The price of an option can be obtained by computing the true probabilities of each state of nature, working out the expected option payoff across those states and then discounting back to the present.
Several investment committee members have asked about interest rate swap agreements and how they are used in the management of domestic fixed-income portfolios. (i) Define an interest rate swap and briefly describe the obligation of each party involved (ii) Cite and explain two examples of how interest rate swaps could be used by a fixed-income portfolio manager to control risk or improve return.
Help plz
M4
Merck is an example of a company who decided to mitigate the adverse impact of market fluctuations by entering into hedging agreements using: B. Interest rate swaps C. Both A & B A. Currency options D. Neither A or B
about SOFR and LIBOR a SOFR represents the interest rate of the unsecured funds LIBOR is a good proxy of the risk-free rate SOFRS include triparty repo data from the Bank of New York Mellon (BNYM) and the Depository Trust & Clearing Corporation (DTCC). LIBOR now in 2020 is still the most influential interest rate in the international market.
A MNC wishes to reduce the exposure to British pound payables, it can _________. I. Purchase pounds forward II. Buy a pound futures contract III. Buy a pound put option IV. Buy a pound call option A. I, II, III B. I, II C. II, III, IV D. I, II, IV

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