Financial Econometrics (AP/ECON 4140 S2)
Winter 2013
Instructor: Yasin Janjua
Assignment # 1
Total Points (100)
Part I: Do the following Questions
1. Define American Call/Put option 10 pts
Answer
Options allow investors to hedge against risk. If one expects stock prices to rise, then he/she may like to invest in stocks. However, buying stocks also entails risk because of price fluctuation. The risk will be potentially large in case price falls to zero. In order to avoid risk one may like to buy a call option.
An American call option gives one the right, but not an obligation, to buy a specified number of shares of a stock for a specified price called exercise or strike price before the maturity date or on
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The most important calendar anomalies identified by Sewell are the January effect and the weekend effect. b. There are several different types of calendar effects identified in literature. * Intraday effects are known to exist, * the weekend effect seems to have all but disappeared, * intramonth effects were found in most countries, * the January effect has halved, and * holiday effects exist in some countries. * Halloween Indiactor: a trading strategy of tactical asset allocation based on the old saying * ‘sell in May and go away’ generated abnormal returns in comparison with stock market indices in most countries * Daylight Saving Effect: Daylight-saving weekends are typically followed by large negative returns on financial market indices (roughly 200 to 500 per cent in comparison to weekend effect), and researchers argue that the effect could be because of changes in sleep patterns.
Part II: R-Code Programming 1. An R programmer ran the following code and he/she got an error message.
a) > testnorm <- rnorm(1000) > hist(testnorm, prob = TRUE) > mu <- mean(testnorm) > sigma <- sd(mynorm) Error in sd(mynorm) : object 'mynorm' not found
b) > x <- seq(-4, 4, length = 1000) > y <- dnorm(x, mu, sigma) Error in dnorm(x, mu, sigma) : object
ANSWER: Francis Willard was born in Churchville, NY. Francis was a women suffragist; she was an American educator, temperance reformer. She was the
What is the thesis of Johnson’s essay? If it is stated directly, locate the relevant sentence or sentences. If it is implied, state the thesis in
The investment in call options entails higher risks but can lead to higher returns. If the stock price stays at $94, an investor who buys call options loses $9,400 whereas an investor who buys shares neither gains nor loses anything. If the stock price rises to $120, the investor who buys call options gains
1. The pressure announced on last night's television weather broadcast was 29.92. Explain how this was measured and give the units. Would this be considered an unusually large or low pressure value?
Nicki asks if Dana believes in her, it is a big step for Dana to allow Nicki, a person she met only a few weeks earlier, to save her sister from going through the abuse she went through as a younger child. Nicki is able to save Dana’s sister and helps Dana learn to trust her mother and sister again. In conclusion Dana becomes a trusting individual when she learns her sister is in trouble and opens up to let Nicki help.
1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points)
2. Draw a flow diagram of the unit operations involved in sugar refining and at each step write a brief sentence explaining what is occurring. Use the information from SKIL site to develop your flow chart. Since the information does not start from the beginning of the refining process, please include an extraction step (extraction is explained in your textbook). Either milling or diffusion is
The teacher has to be responsible for designing the scheme of work, lesson plans, obtaining up to date qualification handbooks, agree individual learning plans, carrying out risk assessments, write realistic aims.
Acceptance-This basically means that the terms of the offer have been clearly understood and agreed to through consent and assent and at no time will the terms be changed.
My writing assignment is to explain nonverbal communication “messages expressed by nonlinguistic means”. (Adler et al 431) so that you may understand that verbal communication is just a small part of the communication process and that through nonverbal communication you can communicate without even using words or by the way you say the words. Let me warn you that you need to be very careful when trying to interpret nonverbal communication, because nonverbal communication can be ambiguous. What I mean by that is nonverbal communication can have more than one meaning as you will see later in this writing assignment.
1) You can call the module several times instead of writing it out each time.
Read the following short essay, and then write a 3-5 page response (12-point font, double-spaced, normal margins, no cover page, no binders). Your response should do the following three things: (1) state what the main conclusion of the essay is; (2) state what the most important premises (including sub-conclusions) are—i.e., state which premises are most important if the argument is to rationally convince its audience; (3) evaluate the quality of the argument, giving detailed reasons to justify your evaluation. For purposes of evaluation, assume that the speaker is a contemporary Canadian philosopher and the audience is a group of students in Introduction to Philosophy.
In the parenthesis enter the cell number and letter to find total expenses per week. (i.e.) =sum(b5:b11)
Third, review and examine the impact of different investment strategies to generate abnormal return and to find out the return predictability of the overreaction in UK market.
There are two kinds of options in the market, European options and American options. The most common traded one is American options which can be exercised before maturity in the market. Call options provide the holders the right to buy the underlying assets at an exercise price while put options is the right to sell (Rad et al., 2015).