Why are stock index futures and options sometimes referred to as derivative products? Why do some investors believe derivative products make the markets more volatile?
Answer to relevant QuestionsWhat does the term basis mean in the futures market? If there is a premium and it expands with the passage of time, what is the general implication? Why might the overuse of portfolio insurance be dangerous to the market? Return to problem 1 and assume that margin must be maintained at a minimum level of $22,500. If the S&P Index futures contract goes from its initial value down to $1,051.80, will there be a call for more margin? What does the security market line indicate? In general terms, how is it different from the capital market line? An investment has the following range of outcomes and probabilities: Calculate the expected value and the standard deviation (round to two places after the decimal point where necessary).
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