Explain why portfolio insurance may have played a part in the stock market crash of October 19,

Question:

Explain why portfolio insurance may have played a part in the stock market crash of October 19, 1987.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For answer-question

Fundamentals Of Futures And Options Markets

ISBN: 9781292422114

9th Global Edition

Authors: John Hull

See More Books

Question Posted: Mar 05, 2024 01:00 AM

See More Questions

In the stock market crash of October 19, 1987, the market price of IBMs capital stock fell by over $31 per share. Explain the effects, if any, of this decline in share price on IBMs balance sheet.
The Great Depression began in the summer of 1929, but the stock market crash of October 1929 may have deepened the initial recession. The stock market crash increased the pessimism of both households...
CASE: Walmart in Japan Walmarts Expansion into the Japanese market Walmart is, in many ways, the quintessential American retailer, though this hasnt stopped the company from expanding aggressively to...
Is informing the consumer about any toxic substances used in the manufacture of a product sufficient to produce an efficient level of toxic substance use for that product? Why or why not?
Should suppliers and customers have any role in defining the business impact of a disruption in your organization's various business functions? Explain why or why not.
1. Compute Accels Companies current ratio at May 31, 2024 and 2023. 2. Did Accels Companies current ratio improve, deteriorate, or hold steady during 2024? Accels Companies, a home improvement store...
You need to understand the approach described in question 3 in More Genetic TIPS before answering this question. A muscle-specific gene was cloned and then subjected to promoter bashing. As shown...
Leach Inc. experienced the following events for the first two years of its operations: 2016: 1. Issued $10,000 of common stock for cash. 2. Provided $78,000 of services on account. 3. Provided...
Video - Youtube -Lease Accounting Basic Example To Determine Lease Type (Capital Vs Operating Lease) https://www.youtube.com/watch?v=slNrpKODlSw
The probability for an up-movement on a binomial tree is (a d)/(u d). Explain how the growth factor a is calculated for (a) a non-dividend-paying stock, (b) a stock index, (c) a foreign currency,...
Can the vega of a derivatives portfolio be changed by taking a position in the underlying asset? Explain your answer.
Listed below are seven corporations that receive cash from customers prior to earning revenue: America West Corporation (airline) The New York Times Company (newspaper) Royal Caribbean (cruise...
He takes reference Consider that Dr. Turhan does an experiment. temperature of water is as 0.01 C and puts 1 kg water in an adiabatic piston-cylinder device. Then he takes all air outside inside the...
24. A student in a lab experiment jumps upward off a common bathroom scale as the lab partner records the scale reading. 1 What does the lab partner observe during the instant the student pushes off?
a) Given a line 1 with direction vector u and a plane P with normal vector N, show that InP=1 or 1nP = if and only if u = 0 . b) Determine the conditions under which the equations Ax+By+ Cz + D = 0...
What is the current, i? 452 V1-2V M 852 V2-3V M None of the choices 0.25 A -0.25 A 0.28 A -0.88 A 0.88 A IN 852 if IDEAL Vo
An electric kettle consumes 5A current when connected to a voltage source of 220V. (a) Calculate the Power of the electric kettle? (b) If 1.2 kg water at 25C is heated in the electric kettle, how...
When 2-methyl-2-propanol is treated with sulfuric acid, 2-methylpropene is formed. Show all of the steps in the mechanism for this reaction. Don't forget to use curved arrows to show the movement of...
A stock has had returns of 8 percent, 26 percent, 14 percent, 17 percent, 31 percent, and 1 percent over the last six years. What are the arithmetic and geometric average returns for the stock?
The most recent estimate of the daily volatility of an asset is 1.5% and the price of the asset at the close of trading yesterday was $30.00. The parameter in the EWMA model is 0.94. Suppose that...
The most recent estimate of the daily volatility of an asset is 1.5% and the price of the asset at the close of trading yesterday was $30.00. The parameter in the EWMA model is 0.94. Suppose that...
A company uses the GARCH(1,1) model for updating volatility. The three parameters are , , and . Describe the impact of making a small increase in each of the parameters while keeping the others fixed.
What distinguishes health care economics from that of other sectors? Explain.
Flight Caf prepares in-flight meals for airlines and its planning budget for July appears below: Flight Caf Planning Budget For the Month Ended July 31 Budgeted meals (q) Revenue ($4.10q) Expenses:...
What is a quantum computer? What distinguishes a quantum computer from a digital one?

Explain why portfolio insurance may have played a part in the stock market crash of October 19,

Question:

Step by Step Answer:

Portfolio insurance by creating put options synthetically was popular in 1987 It works as follows W...View the full answer

Fundamentals Of Futures And Options Markets

Students also viewed these Business questions