Derivatives Study Guide

Although Durick sent out a new insurance policy with a notation that the policy was automatically accepted unless Andrus notified him to the contrary, Andrus did not respond. Implied acceptance ?refers to a situation where one party presents an offer to another party and states that acceptance will be operative upon some conditional performance by the other party.?

3. Microbiologists employee a number of approached to acquiring a pure culture from a from sample containing a number of different types of bacteria. Briefly describe three different procedures commonly used to secure pure cultures from a mixed culture. The use of simple labeled diagrams may be quite helpful.

Futures are a contract or legal agreement, where an investor agrees to purchase a certain amount of a physical good or financial asset on a specific date for a set price.

i. Virtually instantaneous  general rule should apply (ie. contract is formed when the offeree’s acceptance is received by the offeror; per Lord Wilberforce in Brinkibon)4;

7.  Under a shipment contract, the seller is required to do all but which of the following?

u. P2) This implies that the seller who intends to enter a contract with a customer has a duty to disclose exactly what the customer is buying and what the terms of the sale are.

10. The current price of silver is $750. Storage costs are $8 per ounce per quarter payable in advance. The interest rate is 12% p.a. with continuous compounding. Calculate the futures price of silver for delivery in six months (to two decimal places).

iv. The fourth and final condition states, “it is reasonable to assume, based on…that the event of default will not occur. In applying this condition, it is…” (ASC-840-10-25-14-d). Big Bear believes that the likelihood of default is remote.

Analyze the risk associated with exchange-traded derivatives, such as futures and options, and what brokers might do to minimize the risk to investors.

“Contracts law principles in general are uniformly understood and applied across the United States. Contract Law is governed by the common law and the Uniform Commercial Code (UCC Contracts vs Common Law Contracts, 2014).” “Common Law would lead to rejections if any changes were made to the contract (quantities, counter offers, etc.). Its terms include quantity, price, performance time, nature of work and identity of offer. Common Law does not allow revoking of the option contracts” (UCC vs Common Law, 2014). “Common Law is primarily used in real estate and the law is made by the decisions of judges in individual cases” (Rogers, 2012).

European option: An option that can only be exercised at the end of its life

It was Monday morning. Sitting in the parking lot of my school, I quickly reviewed my math notes in preparation for the Pre-Calculus test. The importance of this final test was the make-it-or-break-it point of maintaining my A in the class. My eyes rapidly moved over the study guide in hopes to remember each trigonometry identity required. However, time was running out, and I had to retrieve my things from my locker for my first hour, Pre-Calculus. I rushed to my locker, unpacked my things, and made my way to first hour. The atmosphere of the classroom felt heavy and full of fear, as most do during test days. Unaware of what was being talked about, I tried to recall the trigonometry identities for one last time. The teacher then whipped out a thick stack of papers and slammed them on his desk. Everyone’s heart sunk. Slowly, the teacher handed out the seven-page exam and passed them down the rows. I swiftly and quietly finished my test feeling confident about how I did.

Differential calculus is one of the subfields of calculus, and deals with the rate of change of various quantities. The other field of calculus is integral calculus, the two fields being the inverse of each other. One way to understand the relationship is to observe that differential calculus cuts a whole into tiny pieces, to find out how quickly it changes, while integral calculus put the small pieces together to find the whole.

Understanding the tax implications of equity derivatives and the application of these instruments for taxable U.S. clients is a challenge worth meeting. Equity derivatives can playa useful role in implementing tax-efficient strategies that maximize after-tax returns. The key is to understand the costs, benefits, and rules for applying each instrument or strategy and then to select the best instrument to accomplish the investor's objectives and minimize the taxes.

On January 5, 2000, Phoenix Research and Trading, a Toronto-based hedge fund management group, issued a hastily prepared press release. The firm stated that one of its traders, Stephen Duthie, had lost $7.4 million in unauthorized trading in its publicly traded Phoenix Hedge Fund LP, with the losses originating from a feeder fund called the Phoenix Fixed Income Arbitrage Limited Partnership.