Discuss why marking to market is the preferred method to value derivatives positions as opposed to methods

Question:

Discuss why marking to market is the preferred method to value derivatives positions as opposed to methods based on historical costs.

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

Step by Step Answer:

Related Book For book-img-for-question

Value at Risk The New Benchmark for Managing Financial Risk

ISBN: 978-0071464956

3rd edition

Authors: Philippe Jorion

See More Books

Question Posted: May 03, 2016 02:26 AM

See More Questions

What are the four methods used in by-product costing, and how do they differ? Which is the preferred method and why?
"The net present value method is the preferred method for capital budgeting decisions. Therefore, managers will always use it." Do you agree? Explain.
What effects does marking to market have on futures contracts?
Acculturation is an extremely important topic in this age of globalization and multiculturalism; however, it remains an especially difficult topic to study. Peoples acculturation experiences vary...
Recently, you were dining with four chief financial officers (CFOs) who were attending a seminar on management tools and approaches to improving operations. During dinner, the CFOs shared information...
An air-standard Diesel cycle absorbs 1.500 J mol-1 of heat OL Volume
Describe a patients rights during labor disputes.
In a large department store a customer-complaints office handles an average of six complaints per hour about the quality of service. The distribution is Poisson. a. What is the probability that in...
A stock price is currently trading at $100. Over the next two 6 month periods it will be with up 10% or down 10%. The risk-free interest rate is 8% per annum with continous compunding. What is the...
The 100-lb cylinder rests between the two inclined planes. When P = 15 lb, the cylinder is on the verge of impending motion. Determine the coefficient of static friction between the surfaces of...
What are the extra costs incurred by the creation and scheduling of a process, as compared to the cost of a cloned thread?
An option desk uses the Black-Scholes model to price eurodollar options. What type of risk could this create?
Give several examples of marketing metrics. How might a marketer use each metric to track progress of some important element of a marketing plan?
Assess process capability
If the regression coefficient is negative will the correlation coefficient always be negative? Explain your answer.
Perform run tests to check for nonrandomness in process output.
Access the CPA Canada Handbook and locate the following: a. What number is the CAS for audit documentation? b. How many sections are there to each CAS? c. What is the name of CSAE 3000? d. What...
What is the difference between the interval estimate for the conditional mean and the predictive interval? Under what conditions would you choose to estimate one as opposed to the other? Give...
On January 1, 2024, Tropical Paradise borrows $50,000 by agreeing to a 6%, six-year note with the bank. Loan payments of $828.64 are due at the end of each month with the first installment due on...
Derive Eq. (18.33) from Eq. (18.32).
Turbo Start (Problem 18-17) has current assets totaling $1.5 million (this includes $500,000 in current inventory) and current liabilities totaling $50,000. Find the current ratio and acid-test...
For J&W Graphics Supply, compute the current ratio. Is this a financially healthy company? Explain. J&W Graphics Supply Balance Sheet Data (thousands) Assets Cash $1740 Inventories 900 Accounts...
For Sutton Manufacturing, determine the current ratio and the acid-test ratio. Are these values acceptable? Why or why not? Sutton Manufacturing Balance Sheet Data (Thousands) Assets Liabilities...
Sandy Bank, Incorporated, makes one model of wooden canoe. Partial information is given below. Required: 1. Complete the following table. 2. Suppose Sandy Bank sells its canoes for $510 each....
FIFO and LIFO costs under perpetual inventory system The following units of an item were available for sale during the year: 29 units at $44 Beginning inventory Sale 26 units at $64 First purchase 15...
Pie Corporation acquired 75 percent of Slice Company's ownership on January 1, 20X8, for $93,000. At that date, the fair value of the noncontrolling interest was $31,000. The book value of Slice's...

Discuss why marking to market is the preferred method to value derivatives positions as opposed to methods

Question:

Step by Step Answer:

Marking to market mtm measures the current value of assets and liabiliti...View the full answer

Value at Risk The New Benchmark for Managing Financial Risk

Students also viewed these Finance questions