Question
Hi I need help with some questions for my futures market class. 5. Compare and contrast selling Eurodollar futures and being a fixed rate payer
Hi I need help with some questions for my futures market class.
5. Compare and contrast selling Eurodollar futures and being a fixed rate payer in a swap as a risk management technique. Explain in detail.
6. What is a long only commodity fund, describe its main features. Long only commodity fund have generated returns similar to diversified equity funds. What are the components of the returns from a long only commodity fund? Are commodities a separate asset class? Discuss in detail.
7. Do futures prices contain information about future spot prices? Explain in detail.
8. Should a corporation hedge? Why might it increase firm value? Are there any reasons why a firm would not want to hedge? Explain in detail.
9. Compare and contrast the commitments taken on by a futures contract seller versus a buyer of a put option. Explain in detail.
10. Why is it important for a commercial firm have a derivative position qualify as a hedge? Explain in detail.
11. You have a stock index portfolio with a beta of 1.0 and a market value of $10,000,000. If you sell $10,000,000 nominal value of S&P 500 futures contracts, what is the return of the combined stock and stock index futures contract? What have you done to the original $10,000,000 stock market position? Explain in detail.
12. The recent financial crisis has exposed a need to strengthen the risk management process in financial institutions. Part of these efforts is redesigning the risk management framework. What are the three lines of defense in effective risk management and how do we distinguish among their functions? How do they help manage the risk throughout the organization? Explain in detail.
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