(a) To calculate: The number of contracts that should be entered, if he holds a $ 6 million portfolio of waterworks stock, for hedging purpose using the one-month maturity future contacts of S&P 500 index. Introduction: Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Question

regulations 28 of the company act no 71 of 2008 regulates on the category of companies which are required to be audited, list three types of companies that are required to be audited regulations 43 speak of the social and ethics committee. it is a must that certain companies appoint such a committee. list these three types of companies in terms of regulation 43. more so what is the function of the social and ethics committee.

Answer 1

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 26, Problem 14PS

Summary Introduction

(a)

To calculate:

The number of contracts that should be entered, if he holds a $6 million portfolio of waterworks stock, for hedging purpose using the one-month maturity future contacts of S&P 500 index.

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Summary Introduction

(b)

To calculate:

The standard deviation of the monthly return of the hedged portfolio

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

The probability of getting negative return taking an assumption that there is a normal distribution of monthly returns and the risk free rate is 0.5% .

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

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regulations 28 of the company act no 71 of 2008 regulates on the category of companies which are required to be audited, list three types of companies that are required to be audited regulations 43 speak of the social and ethics committee. it is a must that certain companies appoint such a committee. list these three types of companies in terms of regulation 43. more so what is the function of the social and ethics committee.

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Answer 2

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 26, Problem 14PS

Summary Introduction

(a)

To calculate:

The number of contracts that should be entered, if he holds a $6 million portfolio of waterworks stock, for hedging purpose using the one-month maturity future contacts of S&P 500 index.

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Summary Introduction

(b)

To calculate:

The standard deviation of the monthly return of the hedged portfolio

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

The probability of getting negative return taking an assumption that there is a normal distribution of monthly returns and the risk free rate is 0.5% .

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

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Answer 3

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 26, Problem 14PS

Summary Introduction

(a)

To calculate:

The number of contracts that should be entered, if he holds a $6 million portfolio of waterworks stock, for hedging purpose using the one-month maturity future contacts of S&P 500 index.

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Summary Introduction

(b)

To calculate:

The standard deviation of the monthly return of the hedged portfolio

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

The probability of getting negative return taking an assumption that there is a normal distribution of monthly returns and the risk free rate is 0.5% .

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Expert Solution & Answer

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Answer 4

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 26, Problem 14PS

Summary Introduction

(a)

To calculate:

The number of contracts that should be entered, if he holds a $6 million portfolio of waterworks stock, for hedging purpose using the one-month maturity future contacts of S&P 500 index.

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Summary Introduction

(b)

To calculate:

The standard deviation of the monthly return of the hedged portfolio

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

The probability of getting negative return taking an assumption that there is a normal distribution of monthly returns and the risk free rate is 0.5% .

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Expert Solution & Answer

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Answer 5

Chapter 26, Problem 14PS

Summary Introduction

(a)

To calculate:

The number of contracts that should be entered, if he holds a $6 million portfolio of waterworks stock, for hedging purpose using the one-month maturity future contacts of S&P 500 index.

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Summary Introduction

(b)

To calculate:

The standard deviation of the monthly return of the hedged portfolio

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Summary Introduction

(c)

To calculate:

The probability of getting negative return taking an assumption that there is a normal distribution of monthly returns and the risk free rate is 0.5% .

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Answer 6

Chapter 26, Problem 14PS

Summary Introduction

(a)

To calculate:

The number of contracts that should be entered, if he holds a $6 million portfolio of waterworks stock, for hedging purpose using the one-month maturity future contacts of S&P 500 index.

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Answer 7

Chapter 26, Problem 14PS

Summary Introduction

(a)

To calculate:

The number of contracts that should be entered, if he holds a $6 million portfolio of waterworks stock, for hedging purpose using the one-month maturity future contacts of S&P 500 index.

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Answer 8

Summary Introduction

(b)

To calculate:

The standard deviation of the monthly return of the hedged portfolio

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 9

Summary Introduction

(b)

To calculate:

The standard deviation of the monthly return of the hedged portfolio

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Answer 10

Summary Introduction

(c)

To calculate:

The probability of getting negative return taking an assumption that there is a normal distribution of monthly returns and the risk free rate is 0.5% .

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Answer 11

Summary Introduction

(c)

To calculate:

The probability of getting negative return taking an assumption that there is a normal distribution of monthly returns and the risk free rate is 0.5% .

Introduction:

Hedging is referred as the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments. It can be more understood by saying that if we go long in the market then it can involve protection against downside fluctuations and if we go short in position in the market then it can involve protection against upsides fluctuations.

Answer 12

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Ch. 26 - Prob. 1PS Ch. 26 - Prob. 2PS Ch. 26 - Prob. 3PS Ch. 26 - Prob. 4PS Ch. 26 - Prob. 5PS Ch. 26 - Prob. 6PS Ch. 26 - Prob. 7PS Ch. 26 - Prob. 8PS Ch. 26 - Prob. 9PS Ch. 26 - Prob. 10PS

Solution Summary: The author explains that hedging is the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments.

(b)

To calculate:

The standard deviation of the monthly return of the hedged portfolio

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Chapter 26 Solutions

Solution Summary: The author explains that hedging is the protection from the fluctuations in the price of stocks which can cause losses to the investor on investments.

(b) To calculate: The standard deviation of the monthly return of the hedged portfolio Introduction: Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.

Chapter 26 Solutions

(b)

To calculate:

The standard deviation of the monthly return of the hedged portfolio

Introduction:

Standard deviation is a measure to calculate the deviation from the mean which is also called as a measure of dispersion. It helps in analyzing the performance of the fund.