Explain the concept of moneyness?
Order ID |
53563633773 |
Type |
Essay |
Writer Level |
Masters |
Style |
APA |
Sources/References |
4 |
Perfect Number of Pages to Order |
5-10 Pages |
Description/Paper Instructions
Explain the concept of moneyness?
Q-1. The current stock price be SAR 50 and that can go up or down by 20 percent per period. The risk-free rate is 10 percent. Use one binomial period. (5 Marks)
Determine the two possible stock prices for the next period. (1 Mark)
Determine the intrinsic values at expiration of a European call option with an exercise price of SAR 45. (1.5 Marks)
Find the value of the option today. (1.5 Marks)
Calculate the hedge ratio. (1 Mark)
Q-2. Explain the concept of moneyness? (3 Marks)
Q-3. Explain the Options and discuss the difference between American and European options.
(2 Marks)
Answers:
1-
2-
3-
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Q-4 Derivatives are used to manage financial risk. Do you agree? (100-150 Words)
You are required to reply to at least two peer answers. These post replies must need to be substantial and constructive. (40-60 Words per response)
Peer answer 1: All participants in the financial market find that financial derivatives are useful tools for risk management, and they are used by three types of market participants: commercial banks, investment banks, and investors. Easy to understand and that can create credit risk and so must be understood Complex derivations depend on complex models to use which leads to the risk of this chosen model There are credit rating agencies explaining this complexity to investors but their rating can be misunderstood and as a result, may create several risks
It appears that finding a variety of derivative products may be useful for their own risk management purposes and there are several ways and strategies for using a financial derivative can be beneficial for risk management. At the same time, derivatives present some significant challenges to risk management.
Response 1: –
Peer answer 2: Derivatives are most commonly exchanged to decrease risk or to bet on increasing risk in order to make a profit, and their value is determined by the quantity demanded for the asset (Chance & Brooks 2015). If an investor with sterling accounts wished to buy shares in a firm with dollars, they would indeed be subjected to exchange rate risk because the value of the pound could fall or grow against the dollar over the investment term, influencing the value of their investment. To avoid this danger, the investor could purchase a currency derivative to lock in a set exchange rate and protect their funds.
Response 2: –
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(Kindly site question (4) separately)
Background: You are the manager of an e-cigarette store(an Vape shop) and you are planning to launch a “subscription” service
where customers can choose to receive bi-weekly or monthly refills of products from the store. And here’s what you need to consider and do.
why do you think this “subscription” service is effective? 2. If this service is implemented, how will it change the store? How do we compare to our peers? 3. what makes this service attractive to customers? 4. what do you need to do to prepare for this service? 5. What are the possible problems you may encounter during the preparation or implementation phase? How do you
plan to solve them? 6. please list the details of each step of the process from preparation to implementation. 7. If you need to collect customers’ opinions, how do you need to do it? 8. How long will it take for the service to pay for itself since it will be free shipping? (Use the following data) 9. How long is the “trial” period for this service? Why is this time set? 10. From the above analysis, do you think this service is feasible?
Vape:
DATA:
Estimate packs of pods sold (Monthly)
Profit (Monthly)
Cost increase (Monthly)
Revenue (Monthly)
premises: Shipping fee for each order is $9
Without Subscription Service 800 $16,000 $4,800 $11,200
With Subscription Service 1100 $21,400.00 $7,140.00 $14,260.00
Total Revenue Increase $3,060.00
Introduction:
12pt, Time New Roman, double space, 5 pages
Do some research if you not sure what it is
If you use outside resource or any reference, cite it out!
Think it yourself, do not copy from others.
RUBRIC
QUALITY OF RESPONSE |
NO RESPONSE |
POOR / UNSATISFACTORY |
SATISFACTORY |
GOOD |
EXCELLENT |
Content (worth a maximum of 50% of the total points) |
Zero points: Student failed to submit the final paper. |
20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. |
30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. |
40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. |
50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. |
Use of Sources (worth a maximum of 20% of the total points). |
Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. |
5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. |
10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. |
15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. |
20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. |
Grammar (worth maximum of 20% of total points) |
Zero points: Student failed to submit the final paper. |
5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors |
10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors |
15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. |
20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. |
Structure of the Paper (worth 10% of total points) |
Zero points: Student failed to submit the final paper. |
3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. |
5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper |
7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. |
10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. |
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