Whether there is any chance of spending resources on creating real assets in an efficient way than just rearranging them and highlight some benefits earned by creating an array of derivative securities using primary securities. Introduction: Real assets: Assets which have a physical form can be justified as “real assets”. Money invested in purchase of real assets proves beneficial as it has inherent worth due to its properties. Few examples of real assets are building, land, machinery and plant etc.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 1, Problem 1PS

Summary Introduction

To evaluate: Whether there is any chance of spending resources on creating real assets in an efficient way than just rearranging them and highlight some benefits earned by creating an array of derivative securities using primary securities.

Introduction:

Real assets: Assets which have a physical form can be justified as “real assets”. Money invested in purchase of real assets proves beneficial as it has inherent worth due to its properties. Few examples of real assets are building, land, machinery and plant etc.

Expert Solution & Answer

Explanation of Solution

First of all, basis of financial engineering can be referred to as a program where finance and investment related aspects are dealt with using mathematical techniques. In other words, it is a platform which is a bunch of financial theory, engineering methods, various mathematical tools and programming techniques. Normally it contains a lot of paper shuffling.

Even though all financial assets are good, it cannot be assumed that all financial assets work the same way. If financial assets like bonds, stocks or mortgages are considered, it is found that these assets have their own payment format. The risks and the returns earned also differ accordingly For instance, consider government bonds and mortgage loans, both have particular payment format but with a difference − government bonds make coupon payments semi- annually while mortgage loans have a facility of being prepaid. When it comes to borrowing, sometimes the government borrows money with risks on reinvestment and people having an intention of buying a home may borrow money with zero prepayment and risks applicable by default.

Whatever the situation may be, the financial engineering products work better on financial underlying assets. But still investment in real assets is worthy as sometimes risk factor involved is less. The concept of more risk, more profit plays significant role in making a decision.

Conclusion

As concluded that the investment in real assets is worthy as sometimes risk factor involved in real assets is less.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Don't solve. I mistakenly submitted blurr image please comment i will write values. please dont Solve with incorrect values otherwise unhelpful.

The image is blurr please comment i will write values. please dont Solve with incorrect values otherwise unhelpful.

Question 6 A five-year $50,000 endowment insurance for (60) has $1,000 underwriting expenses, 25% of the first premium is commission for the agent of record and renewal expenses are 5% of subsequent premiums. Write the gross future loss random variable: Presuming a portfolio of 10,000 identical and independent policies, the expected loss and the variance of the loss of the portfolio are given below (note that the premium basis is not given or needed): E[L] = 10,000(36,956.49 - 3.8786P) V[L] 10,000 (50,000 + 14.52P)². 0.00095 Find the premium that results in a 97.5% probability of profit (i.e. ¹ (0.975) = 1.96). Premium: Please show your work below

Answer 2

Question

Chapter 1, Problem 1PS

Summary Introduction

To evaluate: Whether there is any chance of spending resources on creating real assets in an efficient way than just rearranging them and highlight some benefits earned by creating an array of derivative securities using primary securities.

Introduction:

Real assets: Assets which have a physical form can be justified as “real assets”. Money invested in purchase of real assets proves beneficial as it has inherent worth due to its properties. Few examples of real assets are building, land, machinery and plant etc.

Expert Solution & Answer

Explanation of Solution

First of all, basis of financial engineering can be referred to as a program where finance and investment related aspects are dealt with using mathematical techniques. In other words, it is a platform which is a bunch of financial theory, engineering methods, various mathematical tools and programming techniques. Normally it contains a lot of paper shuffling.

Even though all financial assets are good, it cannot be assumed that all financial assets work the same way. If financial assets like bonds, stocks or mortgages are considered, it is found that these assets have their own payment format. The risks and the returns earned also differ accordingly For instance, consider government bonds and mortgage loans, both have particular payment format but with a difference − government bonds make coupon payments semi- annually while mortgage loans have a facility of being prepaid. When it comes to borrowing, sometimes the government borrows money with risks on reinvestment and people having an intention of buying a home may borrow money with zero prepayment and risks applicable by default.

Whatever the situation may be, the financial engineering products work better on financial underlying assets. But still investment in real assets is worthy as sometimes risk factor involved is less. The concept of more risk, more profit plays significant role in making a decision.

Conclusion

As concluded that the investment in real assets is worthy as sometimes risk factor involved in real assets is less.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 1, Problem 1PS

Summary Introduction

To evaluate: Whether there is any chance of spending resources on creating real assets in an efficient way than just rearranging them and highlight some benefits earned by creating an array of derivative securities using primary securities.

Introduction:

Real assets: Assets which have a physical form can be justified as “real assets”. Money invested in purchase of real assets proves beneficial as it has inherent worth due to its properties. Few examples of real assets are building, land, machinery and plant etc.

Expert Solution & Answer

Explanation of Solution

First of all, basis of financial engineering can be referred to as a program where finance and investment related aspects are dealt with using mathematical techniques. In other words, it is a platform which is a bunch of financial theory, engineering methods, various mathematical tools and programming techniques. Normally it contains a lot of paper shuffling.

Even though all financial assets are good, it cannot be assumed that all financial assets work the same way. If financial assets like bonds, stocks or mortgages are considered, it is found that these assets have their own payment format. The risks and the returns earned also differ accordingly For instance, consider government bonds and mortgage loans, both have particular payment format but with a difference − government bonds make coupon payments semi- annually while mortgage loans have a facility of being prepaid. When it comes to borrowing, sometimes the government borrows money with risks on reinvestment and people having an intention of buying a home may borrow money with zero prepayment and risks applicable by default.

Whatever the situation may be, the financial engineering products work better on financial underlying assets. But still investment in real assets is worthy as sometimes risk factor involved is less. The concept of more risk, more profit plays significant role in making a decision.

Conclusion

As concluded that the investment in real assets is worthy as sometimes risk factor involved in real assets is less.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 1, Problem 1PS

Summary Introduction

To evaluate: Whether there is any chance of spending resources on creating real assets in an efficient way than just rearranging them and highlight some benefits earned by creating an array of derivative securities using primary securities.

Introduction:

Real assets: Assets which have a physical form can be justified as “real assets”. Money invested in purchase of real assets proves beneficial as it has inherent worth due to its properties. Few examples of real assets are building, land, machinery and plant etc.

Expert Solution & Answer

Explanation of Solution

First of all, basis of financial engineering can be referred to as a program where finance and investment related aspects are dealt with using mathematical techniques. In other words, it is a platform which is a bunch of financial theory, engineering methods, various mathematical tools and programming techniques. Normally it contains a lot of paper shuffling.

Even though all financial assets are good, it cannot be assumed that all financial assets work the same way. If financial assets like bonds, stocks or mortgages are considered, it is found that these assets have their own payment format. The risks and the returns earned also differ accordingly For instance, consider government bonds and mortgage loans, both have particular payment format but with a difference − government bonds make coupon payments semi- annually while mortgage loans have a facility of being prepaid. When it comes to borrowing, sometimes the government borrows money with risks on reinvestment and people having an intention of buying a home may borrow money with zero prepayment and risks applicable by default.

Whatever the situation may be, the financial engineering products work better on financial underlying assets. But still investment in real assets is worthy as sometimes risk factor involved is less. The concept of more risk, more profit plays significant role in making a decision.

Conclusion

As concluded that the investment in real assets is worthy as sometimes risk factor involved in real assets is less.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 1, Problem 1PS

Summary Introduction

To evaluate: Whether there is any chance of spending resources on creating real assets in an efficient way than just rearranging them and highlight some benefits earned by creating an array of derivative securities using primary securities.

Introduction:

Real assets: Assets which have a physical form can be justified as “real assets”. Money invested in purchase of real assets proves beneficial as it has inherent worth due to its properties. Few examples of real assets are building, land, machinery and plant etc.

Expert Solution & Answer

Explanation of Solution

First of all, basis of financial engineering can be referred to as a program where finance and investment related aspects are dealt with using mathematical techniques. In other words, it is a platform which is a bunch of financial theory, engineering methods, various mathematical tools and programming techniques. Normally it contains a lot of paper shuffling.

Even though all financial assets are good, it cannot be assumed that all financial assets work the same way. If financial assets like bonds, stocks or mortgages are considered, it is found that these assets have their own payment format. The risks and the returns earned also differ accordingly For instance, consider government bonds and mortgage loans, both have particular payment format but with a difference − government bonds make coupon payments semi- annually while mortgage loans have a facility of being prepaid. When it comes to borrowing, sometimes the government borrows money with risks on reinvestment and people having an intention of buying a home may borrow money with zero prepayment and risks applicable by default.

Whatever the situation may be, the financial engineering products work better on financial underlying assets. But still investment in real assets is worthy as sometimes risk factor involved is less. The concept of more risk, more profit plays significant role in making a decision.

Conclusion

As concluded that the investment in real assets is worthy as sometimes risk factor involved in real assets is less.

Answer 6

Chapter 1, Problem 1PS

Summary Introduction

To evaluate: Whether there is any chance of spending resources on creating real assets in an efficient way than just rearranging them and highlight some benefits earned by creating an array of derivative securities using primary securities.

Introduction:

Real assets: Assets which have a physical form can be justified as “real assets”. Money invested in purchase of real assets proves beneficial as it has inherent worth due to its properties. Few examples of real assets are building, land, machinery and plant etc.

Expert Solution & Answer

Explanation of Solution

First of all, basis of financial engineering can be referred to as a program where finance and investment related aspects are dealt with using mathematical techniques. In other words, it is a platform which is a bunch of financial theory, engineering methods, various mathematical tools and programming techniques. Normally it contains a lot of paper shuffling.

Even though all financial assets are good, it cannot be assumed that all financial assets work the same way. If financial assets like bonds, stocks or mortgages are considered, it is found that these assets have their own payment format. The risks and the returns earned also differ accordingly For instance, consider government bonds and mortgage loans, both have particular payment format but with a difference − government bonds make coupon payments semi- annually while mortgage loans have a facility of being prepaid. When it comes to borrowing, sometimes the government borrows money with risks on reinvestment and people having an intention of buying a home may borrow money with zero prepayment and risks applicable by default.

Whatever the situation may be, the financial engineering products work better on financial underlying assets. But still investment in real assets is worthy as sometimes risk factor involved is less. The concept of more risk, more profit plays significant role in making a decision.

Conclusion

As concluded that the investment in real assets is worthy as sometimes risk factor involved in real assets is less.

Answer 7

Chapter 1, Problem 1PS

Summary Introduction

To evaluate: Whether there is any chance of spending resources on creating real assets in an efficient way than just rearranging them and highlight some benefits earned by creating an array of derivative securities using primary securities.

Introduction:

Real assets: Assets which have a physical form can be justified as “real assets”. Money invested in purchase of real assets proves beneficial as it has inherent worth due to its properties. Few examples of real assets are building, land, machinery and plant etc.

Answer 8

Expert Solution & Answer

Explanation of Solution

First of all, basis of financial engineering can be referred to as a program where finance and investment related aspects are dealt with using mathematical techniques. In other words, it is a platform which is a bunch of financial theory, engineering methods, various mathematical tools and programming techniques. Normally it contains a lot of paper shuffling.

Even though all financial assets are good, it cannot be assumed that all financial assets work the same way. If financial assets like bonds, stocks or mortgages are considered, it is found that these assets have their own payment format. The risks and the returns earned also differ accordingly For instance, consider government bonds and mortgage loans, both have particular payment format but with a difference − government bonds make coupon payments semi- annually while mortgage loans have a facility of being prepaid. When it comes to borrowing, sometimes the government borrows money with risks on reinvestment and people having an intention of buying a home may borrow money with zero prepayment and risks applicable by default.

Whatever the situation may be, the financial engineering products work better on financial underlying assets. But still investment in real assets is worthy as sometimes risk factor involved is less. The concept of more risk, more profit plays significant role in making a decision.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Conclusion

As concluded that the investment in real assets is worthy as sometimes risk factor involved in real assets is less.

Answer 12

Ch. 1 - Prob. 1PS Ch. 1 - Prob. 2PS Ch. 1 - Prob. 3PS Ch. 1 - Prob. 4PS Ch. 1 - Prob. 5PS Ch. 1 - Prob. 6PS Ch. 1 - Prob. 7PS Ch. 1 - Prob. 8PS Ch. 1 - Prob. 9PS Ch. 1 - Prob. 10PS

Explanation of Solution

Want to see more full solutions like this?

Chapter 1 Solutions