Which type of derivative reduces risk the most? Group of answer choices A. An options contact. B. A commercial paper contract. C. A futures contract. D. A forward contract.
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Which type of derivative reduces risk the most?
Group of answer choices
A. An options contact.
B. A commercial paper contract.
C. A futures contract.
D. A forward contract.
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- Why do firms hedge their risk and what determines the choice of contract for hedging? Also examine the risk of hedging.B. Richard's nickname is "No-Risk Rick" because he is an extremely risk-averse individual. His utility function is given by U(W) = √W. where W represents his current wealth in dollars. He currently has $100 worth of property, but there is a 50% chance that all of it will be stolen. What is Richard's expect wealth and expected utility of wealth? An insurance company offers to reimburse Richard for his loss if the money is stolen. What is the most that Richard would pay for such a policy? Explain. Please solve this with in 1 hourRead the case study below and answer ALL the questions that follow.CRISIS ITIn May 2007, Frontier Airlines Holdings hired Gerry Coady as chief information officer (CIO). Nearly ayear later the airline filed for bankruptcy under Chapter 11. In an interview, Coady describes how hemanaged IT projects during the bankruptcy and recession crisis of 2008–2009.Fundamentally, Coady faced a situation of too many projects and too few resources. Coady used astrategy of focusing on reducing the number of projects in the portfolio. He put together a steeringcommittee of senior management that reviewed several hundred projects. The end result was a reductionto less than 30 projects remaining in the portfolio.How Can You Get to a Backlog of over 100 Projects?“There are never enough resources to get everything done.” Backlogs build over time. Sacred cowprojects get included in the selection system. Projects proposed from people who have left the airline stillreside in the project portfolio.…
- which of the following describes tailing the hedge? a) a more exact calculation of the hedge ratio when futures contracts are used for hedging b) a strategy where the hedge position is increased at the end of the life of the hedge c) a strategy where the hedge position is increased at the end of the life of the futures contract d) a strategy works in derivatives marketsAs and example of a possible investment restriction, an insurer mah only be allowed to invest up to 20 percent of its assets in common stock. What penalty is imposed upon the insurer that invests 30 percent of available assets in common stock?A. The additional 10 percent must be disposed of by year endB. The state regulators would impose a 10 percent fine on the insurer.C. The additional 10 percent would be a nonadmitted asset.D. The additional 10 percent would only be listed at cost.Question A Call(50) = 9; Call(55) = 7; Put(50) = 7; Put(55) = 5. All options are on the same stock and have the same expiration time. Which strategy(s) yields arbitrage profit? A. Buy Call(50), sell Call(55) B. Sell Call(50), buy Call(55) C. Buy Put(50), sell Put(55) D. Sell Put(50), buy Put(55) E. Both A and C F. Both A and D G. Both B and C H. Both B and D . Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line.
- Define consideration. Can consideration be illegal for a binding contract? Can consideration be modified in a contract? Is that ethical?If you are an option trader and the way you make money is by trading volatility, how often do you need to delta hedge an option? A. Theoretically constantly as the underlying forward moves in the market. Practically you hedge as often as practicable. This is the art in trading. B. Just once at the beginning and then you leave it alone C. it depends on what asset class you are trading D. If you're a volatility trader you don't delta hedgePlease explain and give example how the futures market can reduce the chance that a trader can corner the market by delivery of a range of securities, and what's the meaning of "a trader can corner the market"? (Assume the reader only has some stock trading knowledge, you have to guide him to understand above mentioned topic easier)
- you are cattle feeder concerned abount rising corn (and feed ) cost . the march contract is trading at $ 4.29/bu. during the month of january and february , you expect to be able to buy corn at basis of$ -0.28/bu. you buy the march contract the look in price corn . when the time comes to unwind your hedge, the following prices prevail : $4.94/bu march futures and $4.69/bu cash price. what price did you ectually pay for corn? (a) $4.69/bu (b)$ 4.01/bu (C)$ 4.94/bu (d)$ 4.16/buWhen you are long an option and you delta hedge, you want A. traders talking a lot about other asset classes and ignore your underlying B. volatility to increase and the underlying to move around a lot C. the cost of carry to narrow D. volatility to decrease and the underlying to just stop movingPortray a utility function for money that “explains” why a person might buy a lottery ticket (and therefore appears risk acceptant) and also pur- chase a homeowner’s insurance policy (appearing risk averse).
