A. Consider an at-the-money (ATM) short straddle position (i.e. a position obtained by selling an equal number of put and call options with the same
A. Consider an at-the-money (ATM) short straddle position (i.e. a position obtained by selling an equal number of put and call options with the same strike price). a scenario in which underlying stock price remains unchanged and implied volatility drop substantially would result in a decrease in gamma
B. consider a contingent claim XT= f(T,(rt)t?[0,T]) for some deterministic function f) where the process (rt)t?0, as well as zero coupon bonds with maturities T1 and T2 are traded in the market ( with 0
C . you are a firm with a variable interest payment L( T, S) due at time s, where T
D. consider a payer swap you entered into to lock in swap rate equal to K > 0. At time u? (0,T), you mark to your market position based on swap rate quotes on swap contracts with residual maturity T -u and reset/payment fate coinciding with those payer swap already in your portfolio. The market quotes a (counterparty risk free) swap rate s(u) >K at the time u. Assuming your counterparty is credit risk free, your position is making money
E. consider the same position as in question c above. Your counterparty is credit risky, whereas you are not. The market value of your FRA decreases relative to the risk free case of question c above.
2 x 2 matrices over R, considered as a group with respect to multi- plication. In (a)-(e) below, determine whether the given subset is a subgroup of GL(2, IR). (a) The subset consisting of matrices with determinant 1. (b) The subset consisting of matrices of the form (ba ) for a re number a. (c) The subset consisting of (non-singular) triangular matrices. (d) The subset consisting of those (non-singular) matrices where matrix entries are integers. (e) The subset consisting of those (non-singular ) matrices wheUtilitarianism is: A theory from moral philosophy that argues that an act is right if it serves to maximize the attainment of human satisfaction. OA theory from moral philosophy that argues that profit and financial well-being are important parts of evaluating an ethical situation and should not be ignored or dismissed. A theory from moral philosophy that argues that we should always choose the action that will best benefit us as individuals Question 4 2.5 pts The author, Kelman, analyzes cost-benefit analysis through the lens of ethical theory. He argues for three conclusions. Which of the following IS NOT one of Kelman's conclusions? O In areas of environmental, safety. and health regulation, there may be many instances where a certain decision might be right even though its benefits do not outweigh its costs. Of Given the reasons why it is problematic to monetize non-marketed benefits or costs that is a prerequisite for cost-benefit analysis, it is not justifiable to devote major resources to the generation of data for cost-benefit calculations or to undertake efforts to further promote cost-benefit analysis. Getting decision-makers to make more use of cost-benght techniques is important enough to warrant both the expense required to gather the data for improved cost-benefit estimation and the political efforts needed to give the activity higher priority compared to other activities, (): There are good reasons to oppose efforts to put dollar values on on-marketed benefits and costs,( a ) A wealthy graduate of a University wishes to create a scholarship that lasts "forever"? It will yield 10,000 a year to an appropriate student. The interest that can be obtained on the initial endowment is 6% per year. What initial investment is required to create this fund?Question 2 CO2, PO11, C2 In economics, interest can be defined as money paid by a borrower to a lender for a credit or a similar liability. Whereas, interest rate is defined by the interest paid over a time period expressed as a percentage of principal. Based on these fundamental understandings, answer all following questions; i. What is the different (by definition) between simple and compound interest? (1 marks) ii. Calculate the amount deposited 1 year ago to have RM5000 now at the interest rate (ROR) of 10% per year. Calculate the amount of interest earned during this time period (4 marks)
