Compare futures contract to forward contract focusing on the differences. You are expected to be able...

 

Transcribed Image Text:

Compare futures contract to forward contract focusing on the differences. You are expected to be able to calculate speculation profits by taking long or short positions. You are expected to be able to calculate hedging by taking long or short positions. Introduce spot futures parity (1) without dividends (2) with dividends. (3) Explain in what conditions arbitrage transactions can happen. You are expected to be able to set up a hedging portfolio with stock index futures. Ch.15 You are expected to be able to calculate pay offs from investing in underlying assets and/or investing in options. You are expected to be able to pay off structure of call and/or put options Ch.11 Examples for Mid-term Exam (Investment) Explain the efficient frontier (portfolio) introduced by Harry Markowitz portrayed by mean-dominance principle. (Harry Markowitz, Portfolio Selection, The Journal of Finance, Vol. 7, No. 1. (Mar., 1952), pp. 77-91) Spring, 2021 Show in what way investors choose among the portfolios on Harry Markowitz's efficient frontier (portfolio). You are expected to use the idea of utility function in connection with efficient frontier. Explain the way portfolio risk is lowered by means of diversification, explicitly showing what factor brings about the effect. You are expected to calculate expected return, variance (standard deviation) of individual asset returns, further expected return, variance (standard deviation) of portfolios. Decompose portfolio risk and show that your effort to lower it is limited. Explain why. Ch.12 You are expected to be able to calculate expected return of individual risky assets by SML (CAPM) given necessary parameters: E(R)=R₁+[E(R)-R₂10, You are expected to be able to calculate portfolio beta and expected return. You are expected to be able to check whether a stock is undervalued or overvalued in order to determine either to buy or short sell to make money. What is market portfolio? Why is it important in CAPM? - 1- Compare futures contract to forward contract focusing on the differences. You are expected to be able to calculate speculation profits by taking long or short positions. You are expected to be able to calculate hedging by taking long or short positions. Introduce spot futures parity (1) without dividends (2) with dividends. (3) Explain in what conditions arbitrage transactions can happen. You are expected to be able to set up a hedging portfolio with stock index futures. Ch.15 You are expected to be able to calculate pay offs from investing in underlying assets and/or investing in options. You are expected to be able to pay off structure of call and/or put options Ch.11 Examples for Mid-term Exam (Investment) Explain the efficient frontier (portfolio) introduced by Harry Markowitz portrayed by mean-dominance principle. (Harry Markowitz, Portfolio Selection, The Journal of Finance, Vol. 7, No. 1. (Mar., 1952), pp. 77-91) Spring, 2021 Show in what way investors choose among the portfolios on Harry Markowitz's efficient frontier (portfolio). You are expected to use the idea of utility function in connection with efficient frontier. Explain the way portfolio risk is lowered by means of diversification, explicitly showing what factor brings about the effect. You are expected to calculate expected return, variance (standard deviation) of individual asset returns, further expected return, variance (standard deviation) of portfolios. Decompose portfolio risk and show that your effort to lower it is limited. Explain why. Ch.12 You are expected to be able to calculate expected return of individual risky assets by SML (CAPM) given necessary parameters: E(R)=R₁+[E(R)-R₂10, You are expected to be able to calculate portfolio beta and expected return. You are expected to be able to check whether a stock is undervalued or overvalued in order to determine either to buy or short sell to make money. What is market portfolio? Why is it important in CAPM? - 1-

Answer rating: 100% (QA)

Here are the key points about futures contracts vs forward contracts Futures contracts are standardi... View the full answer