Questions from Business Statistics

Q: Explain the difference between the views of financial economists and most practitioners

Explain the difference between the views of financial economists and most practitioners on how KVA should be calculated.

Q: Explain why FVA can be calculated for a transaction without considering the

Explain why FVA can be calculated for a transaction without considering the portfolio to which the transaction belongs, but that the same is not true of MVA.

Q: The price of a stock is $40. The price of

The price of a stock is $40. The price of a 1-year European put option on the stock with a strike price of $30 is quoted as $7 and the price of a 1-year European call option on the stock with a strike...

Q: Explain how you would value a swap that is the exchange of

Explain how you would value a swap that is the exchange of a floating rate in one currency for a fixed rate in another currency.

Q: In Business Snapshot 17.1, what is the cost of

In Business Snapshot 17.1, what is the cost of a guarantee that the return on the fund will not be negative over the next 10 years?

Q: Consider an exchange-traded call option contract to buy 500 shares

Consider an exchange-traded call option contract to buy 500 shares with a strike price of $40 and maturity in 4 months. Explain how the terms of the option contract change when there is: (a) a 10% sto...

Q: Options on General Motors stock are on a March, June,

Options on General Motors stock are on a March, June, September, and December cycle. What options trade on (a) March 1, (b) June 30, and (c) August 5?

Q: In early 2012, the spot exchange rate between the Swiss Franc

In early 2012, the spot exchange rate between the Swiss Franc and U.S. dollar was 1.0404 ($ per franc). Interest rates in the United States and Switzerland were 0.25% and 0% per annum, respectively, w...

Q: An investor sells a European call option with strike price of K

An investor sells a European call option with strike price of K and maturity T and buys a put with the same strike price and maturity. Describe the investor’s position.

Q: An interest rate is quoted as 5% per annum with semiannual

An interest rate is quoted as 5% per annum with semiannual compounding. What is the equivalent rate with (a) annual compounding, (b) monthly compounding, and (c) continuous compounding.