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Options, Futures and Derivatives- international currency

Find attached the Problem Requirement - Options, Futures & Derivatives.
PLEASE ENSURE TO PROVIDE DETAILED RESPONSES with Formulas and explanation & NOT STUDY GUIDE. Find attached the Assessment Additional file

THIS IS NOT ASSIGNMENT

Can you please provide the following as follows for Problem 1:
You will be required to calculate the risk characteristics of the Cheapest-to-Deliver (CTD) bonds and the bond futures from the information provided.

You may also wish to price FX options using the volatility data provided and so an Excel based FX Options calculator will be made available to you.

FX forwards can be valued using the data provided.

You may also wish to consider what other risks are present and what could be done about them.

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Solution Preview

Looking at Problem 1, we see the main risks we wish to mitigate by hedging:

Interest rate risk - can be hedged many ways, including interest rate swaps, bond trading, and bond futures.

Currency risk - can be hedged many ways, including FX derivatives like options and forwards

Credit risk - can be hedged many ways, including credit default swaps, bond trading, and bond futures

Liquidity risk - usually cannot be hedged

Operational risk - usually cannot be hedged, except through insurance in ...

Solution Summary

The international currency options, futures and derivatives are given. Risk characteristics of the cheapest-to-deliver bonds and the bond futures from the information are calculated.

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