31. You compute the current delta for a 50-60 bull spread with the following information: (i) The continuously compounded risk-free rate is 5%. (ii) The underlying stock pays no dividends. (iii) The current stock price is $50 per share. (iv) The stock's volatility is 20%. (iv) The time to expiration is 3 months. How much does delta change after 1 month, if the stock price does not change?

A buyer earns $48,000 salary per year. In order to qualify for an 85 percent loan, his monthly PITI payment cannot be more than 28 percent of his monthly salary. The annual taxes and insurance will be $2,352.60. If the monthly principal and interest payment is $6.00 per $1,000 of loan amount, what is the most sales price he can afford?

Question: Please assist with any thoughts on the below items (1 and 2)

1. Systems development life cycles are crucial to integrate for most, if not all IT based projects. There are various different SDLC models, but all of them essentially accomplish the same task in promoting consitent workflow, progress, and efficiency on IT projects.

In my current work as a software engineer, I work in the agile scrum SDLC model. This is the model that I would also reccomend for GGFRT to follow. In agile, IT projects are divided into ~2 week long sprints, containing meetings at the beginning of the sprint to plan, every day to keep everyone on the same page, and typically a meeting at the end of a sprint to view it retrospectivly. For example, at the organization I work at, we have multiple different projects with multiple different teams working all in conjunction together. The daily meetings keeping everyone of different projects synchronous helps to keep everyone organized and on the same page. This is just one example of why GGFRT should implement the agile scrum work methodology, because as we know GGFRT plans to initiate multiple IT projects at once, so having everyone communicate regularly would help prevent many obstacles along the way.

You are to price options on a futures contract. The movements of the futures price are modeled by a binomial tree. You are given: (i) Each period is 6 months. (ii) u/d = 4/3, where u is one plus the rate of gain on the futures price if it goes up, and d is one plus the rate of loss if it goes down. (iii) The risk-neutral probability of an up move is 1/3. (iv) The initial futures price is 80. (v) The continuously compounded risk-free interest rate is 5%. Let CI be the price of a 1-year 85-strike European call option on the futures contract, and CII be the price of an otherwise identical American call option. Determine CII CI. (A) 0 (B) 0.022 (C) 0.044 (D) 0.066 (E) 0.088 47. Several months ago, an investor sold 100 units of a one-year European call option on a nondividend-paying stock. She immediately delta-hedged the commitment with shares of the stock, but has not ever re-balanced her portfolio. She now decides to close out all positions. You are given the following information: (i) The risk-free interest rate is constant. (ii) Several months ago Now Stock price $40.00 $50.00 Call option price $ 8.88 $14.42 Put option price $ 1.63 $ 0.26 Call option delta 0.794 The put option in the table above is a European option on the same stock and with the same strike price and expiration date as the call option. Calculate profit.

You are considering the purchase of 100 units of a 3-month 25-strike European call option on a stock. You are given: (i) The Black-Scholes framework holds. (ii) The stock is currently selling for 20. (iii) The stock's volatility is 24%. (iv) The stock pays dividends continuously at a rate proportional to its price. The dividend yield is 3%. (v) The continuously compounded risk-free interest rate is 5%. Calculate the price of the block of 100 options. (A) 0.04 (B) 1.93 (C) 3.63 (D) 4.22 (E) 5.09 7. Company A is a U.S. international company, and Company B is a Japanese local company. Company A is negotiating with Company B to sell its operation in Tokyo to Company B. The deal will be settled in Japanese yen. To avoid a loss at the time when the deal is closed due to a sudden devaluation of yen relative to dollar, Company A has decided to buy at-the-money dollar-denominated yen put of the European type to hedge this risk. You are given the following information: (i) The deal will be closed 3 months from now. (ii) The sale price of the Tokyo operation has been settled at 120 billion Japanese yen. (iii) The continuously compounded risk-free interest rate in the U.S. is 3.5%. (iv) The continuously compounded risk-free interest rate in Japan is 1.5%. (v) The current exchange rate is 1 U.S. dollar = 120 Japanese yen. (vi) The daily volatility of the yen per dollar exchange rate is 0.261712%. (vii) 1 year = 365 days; 3 months = year. Calculate Company A's option cost.

4. For a two-period binomial model, you are given: (i) Each period is one year. (ii) The current price for a nondividend-paying stock is 20. (iii) u = 1.2840, where u is one plus the rate of capital gain on the stock per period if the stock price goes up. (iv) d = 0.8607, where d is one plus the rate of capital loss on the stock per period if the stock price goes down. (v) The continuously compounded risk-free interest rate is 5%. Calculate the price of an American call option on the stock with a strike price of 22. (A) 0 (B) 1 (C) 2 (D) 3 (E) 4 5. Consider a 9-month dollar-denominated American put option on British pounds. You are given that: (i) The current exchange rate is 1.43 US dollars per pound. (ii) The strike price of the put is 1.56 US dollars per pound. (iii) The volatility of the exchange rate is = 0.3. (iv) The US dollar continuously compounded risk-free interest rate is 8%. (v) The British pound continuously compounded risk-free interest rate is 9%. Using a three-period binomial model, calculate the price of the put.

2. From the research you conducted on the System Development Life Cycle (SDLC) models, identify which model you would recommend for the IT organization at GGFRT? Relate your choice to one of the strategic objectives of GGFRT and thoroughly explain your answer. In addition, please discuss potential challenges to the successful implementation of the model.

The SDLC Agile Project Management Model is recommended for GGFRT to adopt; specifically, as it relates to accomplishing their 1st and 3rd strategic objectives. Both objectives are centered around improving IT systems and customer satisfaction. The Agile Project Management Model aims to incorporate the following principles:

Customer Satisfaction Collaboration Reviews at regular intervals Sustainable development throughout the SDLC Receptive to change Independent teams working on all aspects of the project(s). Technical excellence Motivation focused The Agile model promotes a collaborative environment that enables the developer and customers to make efficient decisions quickly and appropriately, (Usman, Ogwuleka 2018). This model is ideal for GGFRT based on the multiple systems that require development or modifications along with the need for integration across the various systems. Additionally, some of these systems are designed to support direct customer involvement, with the intent of improving the overall level of service GGFRT can offer its customer base.

Some potential challenges to the successful implementation of the Agile model include potential inexperience of staff, particularly with the programmers, a lack of clarity when it comes to customer expectations, mediocre documentation, and a clear understanding of the level or work and time that will be needed to successfully complete the projects.

Question: Please assist with any thoughts on the below items (1 and 2)

1. Systems development life cycles are crucial to integrate for most, if not all IT based projects. There are various different SDLC models, but all of them essentially accomplish the same task in promoting consitent workflow, progress, and efficiency on IT projects.

In my current work as a software engineer, I work in the agile scrum SDLC model. This is the model that I would also reccomend for GGFRT to follow. In agile, IT projects are divided into ~2 week long sprints, containing meetings at the beginning of the sprint to plan, every day to keep everyone on the same page, and typically a meeting at the end of a sprint to view it retrospectivly. For example, at the organization I work at, we have multiple different projects with multiple different teams working all in conjunction together. The daily meetings keeping everyone of different projects synchronous helps to keep everyone organized and on the same page. This is just one example of why GGFRT should implement the agile scrum work methodology, because as we know GGFRT plans to initiate multiple IT projects at once, so having everyone communicate regularly would help prevent many obstacles along the way.

2. From the research you conducted on the System Development Life Cycle (SDLC) models, identify which model you would recommend for the IT organization at GGFRT? Relate your choice to one of the strategic objectives of GGFRT and thoroughly explain your answer. In addition, please discuss potential challenges to the successful implementation of the model.

The SDLC Agile Project Management Model is recommended for GGFRT to adopt; specifically, as it relates to accomplishing their 1st and 3rd strategic objectives. Both objectives are centered around improving IT systems and customer satisfaction. The Agile Project Management Model aims to incorporate the following principles:

Customer Satisfaction Collaboration Reviews at regular intervals Sustainable development throughout the SDLC Receptive to change Independent teams working on all aspects of the project(s). Technical excellence Motivation focused The Agile model promotes a collaborative environment that enables the developer and customers to make efficient decisions quickly and appropriately, (Usman, Ogwuleka 2018). This model is ideal for GGFRT based on the multiple systems that require development or modifications along with the need for integration across the various systems. Additionally, some of these systems are designed to support direct customer involvement, with the intent of improving the overall level of service GGFRT can offer its customer base.

Some potential challenges to the successful implementation of the Agile model include potential inexperience of staff, particularly with the programmers, a lack of clarity when it comes to customer expectations, mediocre documentation, and a clear understanding of the level or work and time that will be needed to successfully complete the projects.

An insurance company sells single premium deferred annuity contracts with return linked to a stock index, the time-t value of one unit of which is denoted by S(t). The contracts offer a minimum guarantee return rate of g%. At time 0, a single premium of amount is paid by the policyholder, and y% is deducted by the insurance company. Thus, at the contract maturity date, T, the insurance company will pay the policyholder (1 y%) Max[S(T)/S(0), (1 + g%)T ]. You are given the following information: (i) The contract will mature in one year. (ii) The minimum guarantee rate of return, g%, is 3%. (iii) Dividends are incorporated in the stock index. That is, the stock index is constructed with all stock dividends reinvested. (iv) S(0) = 100. (v) The price of a one-year European put option, with strike price of $103, on the stock index is $15.21. Determine y%, so that the insurance company does not make or lose money on this contract.

ensure to answer all