Questions from Business Statistics

Q: A company has assets with a market value of $100.

A company has assets with a market value of $100. It has one outstanding bond issue, a zero coupon bond maturing in two years with a face value of $75. The risk-free rate is 5 percent. The volatility...

Q: Critique each of the three methods of calculating value at risk,

Critique each of the three methods of calculating value at risk, giving one advantage and one disadvantage of each.

Q: Comment on the current credit risk assumed for each of the following

Comment on the current credit risk assumed for each of the following positions. Treat them separately, that is, not combined with any other instruments. a. You are short an out-of-the-money interest...

Q: Explain how closeout netting reduces the credit risk for two firms engaged

Explain how closeout netting reduces the credit risk for two firms engaged in several derivatives contracts?

Q: How does the legal system impose risk on a derivatives dealer?

How does the legal system impose risk on a derivatives dealer?

Q: Identify and discuss benefits for managing financial risks.

Identify and discuss benefits for managing financial risks.

Q: Compare and contrast view-driven risk management with needs-driven

Compare and contrast view-driven risk management with needs-driven risk management.

Q: What is the difference between an initial margin and a maintenance margin

What is the difference between an initial margin and a maintenance margin? What is the variation margin?

Q: Distinguish between the front office and the back office of a derivatives

Distinguish between the front office and the back office of a derivatives dealer. Explain why it is important to keep the front and back offices separate.

Q: You have inherited some stock from a wealthy relative. The stock

You have inherited some stock from a wealthy relative. The stock had poor performance recently, and analysts believe it has little growth potential. You would like to write calls against the stock; ho...