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September 12, 2023

Gold Lease Market

Gold Lease Market There is an active lease market for gold in which arbitrageurs can short or lend out gold at a lease rate of = 1%. Assume gold has no other costs/benefits of carry. Consider a three-month forward contract on gold. (a) If the spot price of gold is $360/oz and the three-month interest rate is 4%, what is the arbitrage-free forward price of gold? (b) Suppose the actual forward price is given to be $366/oz. Is there an arbitrage opportunity? If so, how can it be exploited? Use more than300 words to answer this question and you can have as much time as three days.

There is an active lease market for gold in which arbitrageurs can short or lend out gold at a lease rate of = 1%. Assume gold has no other costs/benefits of carry. Consider a three-month forward contract on gold. (a) If the spot price of gold is $360/oz and the three-month interest rate is 4%, what is the arbitrage-free forward price of gold? (b) Suppose the actual forward price is given to be $366/oz. Is there an arbitrage opportunity? If so, how can it be exploited? Use more than300 words to answer this question and you can have as much time as three days.

September 12, 2023

Evaluating a FSAB proposal

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Evaluating a FSAB proposal What are the principles of the GAAP framework? There are 10 main principles (shown in figure 1), which can help you remember the main mission of GAAP. The organization’s accounting adhered to the standards of GAAP. The organization’s accounting practices are consistent and comparable every reporting period. GAAP covers a wide array of topics such as financial statement presentation, liabilities, assets, equities, revenue and expenses, business combinations, foreign currency, derivatives and hedging, and non-monetary transactions. Financial accounting information is based on historical data.

Evaluating a FSAB proposal What is the title of GAAP Concept No. 5? What is the purpose of the reporting discussed in this concept? When was this concept last modified? should be at least 300 words, formatted and cited in proper APA style with support from at least 2 academic sources. GAAP (generally accepted accounting principles) is a collection of commonly followed accounting rules and standards for financial reporting. The acronym is pronounced gap. How many GAAP concepts are there? What are the principles of the GAAP framework? There are 10 main principles (shown in figure 1), which can help you remember the main mission of GAAP. The organization’s accounting adhered to the standards of GAAP. The organization’s accounting practices are consistent and comparable every reporting period. GAAP covers a wide array of topics such as financial statement presentation, liabilities, assets, equities, revenue and expenses, business combinations, foreign currency, derivatives and hedging, and non-monetary transactions. Financial accounting information is based on historical data. Use APA referencing style.

September 12, 2023

A US Based Corporation

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A US Based Corporation A US-based corporation has decided to make an investment in Sweden, for which it will require a sum of 100 million Swedish kronor (SEK) in three-months’ time. The company wishes to hedge changes in the US dollar (USD)-SEK exchange rate using forward contracts on either the euro (EUR) or the Swiss franc (CHF) and has made the following estimates:

• If EUR forwards are used: The standard deviation of quarterly changes in the

USD/SEK spot exchange rate is 0.007, the standard deviation of quarterly changes.

in the USD/EUR forward rate is 0.018, and the correlation between the changes is.

0.90.

• If CHF forwards are used: The standard deviation of quarterly changes in the

USD/SEK spot exchange rate is 0.007, the standard deviation of quarterly changes.

in the USD/CHF forward rate is 0.023, and the correlation between the changes is.

0.85.

Finally, the current USD/SEK spot rate is 0.104, the current three-month USD/EUR

forward rate is 0.471, and the current three-month USD/CHF forward rate is 0.602.

(a) Which currency should the company use for hedging purposes?

(b) What is the minimum-variance hedge position? Indicate if this is to be a long or

short position. Silver Price 9. The spot price of silver is currently $7.125/oz, while the two- and five-month forward

prices are $7.160/oz and $7.220/oz, respectively.

(a) If silver has no convenience yield what are the implied repo rates?

(b) Suppose silver has an active lease market with lease rate = 0.5% for all maturities

expressed in annualized continously compounded terms. Using the formula developed

in Question 3, identify the implied repo rate for maturities of two months and

five months.

(a) Which currency should the company use for hedging purposes?

(b) What is the minimum-variance hedge position? Indicate if this is to be a long or

short position. Silver Price 9. The spot price of silver is currently $7.125/oz, while the two- and five-month forward

prices are $7.160/oz and $7.220/oz, respectively.

(a) If silver has no convenience yield, what are the implied repo rates?

(b) Suppose silver has an active lease market with lease rate = 0.5% for all maturities

expressed in annualized continously compounded terms. Using the formula developed

in Question 3, identify the implied repo rate for maturities of two months and

five months. Use APA referencing style.

September 11, 2023

One Year FRA rate

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One Year FRA rate If the six-month interest rate is 6% and the one-year interest rate is 8%, Assume that the number of days up to six months is 182 and from six months to one year is 183. what is the meaning for an FRA? over the period from six months to one year? A forward rate agreement (FRA) is an over the counter (OTC) contract between parties that determines the rate of interest to be paid on an agreed-upon date in the future.

In other words, an FRA is an agreement to exchange an interest rate commitment on a notional amount. Forward rate agreements (FRAs) are over the counter (OTC) contracts between parties that determine the rate of interest to be paid on an agreed-upon date in the future. One Year FRA rate the notional amount is not exchanged but is a cash amount based on the rate differentials and the notional value of the contract. A borrower might want to fix their borrowing costs today by entering into an FRA. The forward rate agreement determines the rates to be used along with the termination date and notional value. FRAs are cash-settled. The payment is based on the net differentiate between the interest rate of the contract and the floating rate in the mark referential rate? The notional amount is not exchanged. It is a cash amount based on the rate differentials and the notional value of the contract. One Year FRA rate The notional amount is not exchanged but is a cash amount based on the rate differentials and the notional value of the contract. A borrower might want to fix their borrowing costs today by entering into an FRA. The forward rate agreement determines the rates to be used along with the termination date and notional value. FRAs are cash-settled. The payment is based on the net difference between the interest rate of the contract and the floating rate in the mark reference rate. The notional amount is not exchanged. It is a cash amount based on the rate differentials and the notional value of the contract. Use APA referencing style.

September 11, 2023

LIBOR RATE RETURNS

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LIBOR RATE RETURNS

If the three-month (91 days) Libor rate is 4% and the six-month (183 days) rate is 5%, what should be the 3°ø6 FRA rate? If, at the end of the contract, the three-month Libor rate turns out to be LIBOR was established as a standardized benchmark for the pricing of floating-rate5%, what should the settlement amount be? corporate loans.

However, LIBOR RATE RETURNS, its introduction coincided with the growth of new interest rate– based financial instruments—such as forward rate agreements and interest rate swaps—that also require standardized and transparent interest rate benchmarks. LIBOR is supposed to reflect reality—an average of what banks believe they would have to pay to borrow a “reasonable” amount of currency for a specified short period. That is, it what represents the cost of funds—although a bank may not actually have a need for the funds on any given day. But LIBOR has long been dogged by perceptions that the method for setting the rates is flawed and prone to distorted results during periods of market stress when banks stop lending to each other across the full maturity spectrum, from overnight to one year. LIBOR RATE RETURNS A more direct challenge to its authenticity came from attempts to manipulate LIBOR (and other benchmark rates) by the big British bank Barclays, for which it agreed in June 2012 to pay fines totaling about $450 million to regulators in the United Kingdom and the United States. But LIBOR has long been dogged by perceptions that the method for setting the rates is flawed and prone to distorted results during periods of market stress when banks stop lending to each other across the full maturity spectrum, from overnight to one year. A more direct challenge to its authenticity came from attempts to manipulate LIBOR (and other benchmark rates) by the big British bank Barclays, LIBOR RATE RETURNS for which it agreed in June 2012 to pay fines totaling about $450 million to regulators in the United Kingdom and the United States. Use APA referencing style.

September 11, 2023

ACT/360 Convention

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ACT/360 Convention You have entered into the 69 FRA of Question 20 at the rate of 6%. After three months, the FRA is now a 3 × 6 FRA. If the three-month Libor rate is 5%, and the six-month Libor rate is 7%, what is the current value of the FRA? Assume that the number of days in the first three months is 92. 20.

ACT/360 Convention You enter into an FRA of notional 6 million to borrow on the three-month underlying Libor rate six months from now and lock in the rate of 6%. At the end of six months, if the underlying three-month rate is 6.6% over an actual period of 91 days, what is your payoff given that the payment is made right away? Recall that the ACT/360 convention applies. The payoff for the FRA is $9,073.92 and the current value of the FRA is $306,720. 21. In this case, the original FRA of a notional 6 million has transformed into a 3 × 6 FRA after three months. The 3 × 6 FRA implies a three-month borrowing period starting three months from now and ending six months from now.

To calculate the current value of the FRA, we need to compare the locked-in rate of 6% with the current market rates for the corresponding periods. The three-month Libor rate is 5% and the six-month Libor rate is 7%. Using the ACT/360 convention, the locked-in rate of 6% per annum corresponds to a 0.5% rate for three months. The current three-month Libor rate of 5% corresponds to a 0.4167% rate for three months, and the six-month Libor rate of 7% corresponds to a 0.5833% rate for three months. ACT/360 Convention To calculate the value of the FRA, we take the difference between the locked-in rate and the current market rate for the relevant period. In this case, it would be 0.5% – 0.4167% = 0.0833% Multiplying this by the notional amount of 6 million gives us the current value of the FRA: 0.0833% * 6,000,000 = 4,999.8. Therefore, the current value of the FRA is approximately 4,999.8. Overall, your payoff in scenario 20 would be 3,000, while the current value of the FRA in scenario 21 is approximately 4,999.8. Use APA referencing style.

September 11, 2023

Current value of FRA

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Current value of FRA You have entered into the 69 FRA of Question 20 at the rate of 6%. After three months, the FRA is now a 3 °ø 6 FRA. If the three-month Libor rate is 5%, and the six-month Libor rate is 7%, what is the current value of the FRA? Assume that the number of days in the first three months is 92. Discuss Investment assets vs. consumption assets · Short selling · Assumptions and notations · Forward price for an investment asset that provides no income · Forward price for an investment asset that provides a known cash income · Forward price for an investment asset that provides a known dividend yield · Valuing forward contracts · Forward prices and futures prices · Stock index futures · Currency futures · Illustrate Commodity futures ·

Current value of FRA Cost of carry · Investment assets vs. consumption assets An investment asset is an asset that is held mainly for investment purpose, for example, stocks, bonds, gold, and silver A consumption asset is an asset that is held primarily for consumption purpose, for example, oil, meat, and corn · Short selling an asset that is not owned · Assumptions and notations Assumptions Perfect capital markets: transaction costs are ignored, borrowing and lending rates are the same, taxes are ignored (or subject to the same tax rate), and arbitrage profits are exploited away Arbitrage profit is the profit from a portfolio that involves 1. Zero net cost 2. No risk in terminal portfolio value 3. Positive profit Notations T: time until delivery date (years) S0: spot price of the underlying asset today F0: forward price today = delivery price K if the contract were negotiated today r: zero coupon risk-free interest rate with continuous compounding for. Current value of FRA Cost of carry · Investment assets vs. consumption assets an investment asset is an asset that is held mainly for investment purpose, for example, stocks, bonds, gold, and silver A consumption asset is an asset that is held primarily for consumption purpose, for example, oil, meat, and corn · Short selling an asset that is not owned · Assumptions and notations. Use APA referencing style.

September 10, 2023

Porter’s “Sixth” force

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Porter’s “Sixth” force “Complementors” are Not the same as Competitors! What are complementors in Porter’s forces? Complementors, Porter’s sixth force, are companies or entities that sell or offer goods or services that are compatible with, or complementary to, the goods or services produced and sold in a given industry. Complementary goods offer more value to the consumer together than apart.

According to Porters six forces, complementary goods offer more value to the consumer together than apart. When one product or sale complements another, there exists a condition called complementarity. For illustrate purposes of Porters sixth force?, please consider the following complement examples. Porter’s “Sixth” force A very simple example of complementary goods, the sixth force of Porters framework, is the hotdog and the hotdog bun. A normal consumer prefers to eat a hotdog in a hotdog bun. Rarely would a consumer purchase hotdog without also purchasing hotdog buns, and rarely would a consumer purchase hotdog bun without also purchasing hotdogs. Under the six forces model Porter coined, these two products are complementary.
In the six forces of competition, an example of complementary industries is the tourism industry and the airline industry. When a consumer heads to a tourist destination, he or she often gets there on an airplane. Similarly, whenever a consumer travels on an airplane, that consumer is most likely going to visit a destination which is a part of the tourism industry, such as a hotel or a rental car agency. These two industries are proved complementary by the six forces analysis.
Porters sixth force has become a central theory to in business management and is commonly discussed to this day. As you use Porter’s sixth force of competition to shape profit potential, it’s important to expand analysis by evaluating the entire external environment. Download the free to overcome obstacles and be prepared to react to external forces. Use APA referencing style.

September 6, 2023

Ethical standards

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Ethical standards What are ethical standards? And, ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons.

Ethical standards Generally, there are about 12 ethical principles: honesty, fairness, leadership, integrity, compassion, respect, responsibility, loyalty, law-abiding, transparency, and environmental concerns. Workplace ethics are the set of values, moral principles, and standards that need to be followed by both employers and employees in the workplace. It is the set of rules and regulations that need to be followed by all staff of the workplace What are the 8 norms of ethical standards? The focus of discussion was on the 8 Norms of Conduct of Public Officials and Employees which were a) Commitment to public interest, b) Professionalism, c) Justness and sincerity, d) Public Neutrality, e) Responsiveness to the public, f) Nationalism and patriotism, g) Commitment to democracy and h) Simple living. And, ethical standards include standards relating to rights, such as the right to life, the right to freedom from injury, and the right to privacy. Such standards are adequate standards of ethics because they are supported by consistent and well-founded reasons. Generally, there are about 12 ethical principles: honesty, fairness, leadership, integrity, compassion, respect, responsibility, loyalty, law-abiding, transparency, and environmental concerns.

What are workplace ethics? are the set of values, moral principles, and standards that need to be followed by both employers and employees in the workplace. It is the set of rules and regulations that need to be followed by all staff of the workplace What are the 8 norms of ethical standards? The focus of discussion was on the 8 Norms of Conduct of Public Officials and Employees which were a) Commitment to public interest, b) Professionalism, c) Justness and sincerity, d) Public Neutrality, e) Responsiveness to the public, f) Nationalism and patriotism, g) Commitment to democracy and h) Simple living. Use APA referencing style.

September 6, 2023

psychoanalytic theory

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psychoanalytic theory, Psychoanalysis and trait theory are among the fundamental schools of personality psychology. It is these theories that the author of this work has chosen for comparative analysis. In this work, the author compares and contrasts psychoanalytic and trait perspectives on personality. What is psychoanalytic theory and trait approach?The psychoanalytic perspective puts more emphasis on the underlying dynamics between the id, ego, and superego along with childhood experiences. On the other hand, trait theory gives importance to describing personality in terms of behavioral characteristics rather than internal conflicts. What is the difference between psychodynamic and trait theories? psychoanalytic theory Trait theories typically portray a static, or at least stabilized, view of personality structure as it currently exists. By contrast, psychodynamic theories of personality, to which we next turn, emphasize conflicting forces within the individual that lead to change and development. What are the three concepts of psychoanalytic theory *? Sigmund Freud theorized that the mind was divided into three parts: id, ego and superego can be described as running interference between the id and the superego. It mediates between the drives of the id and the need for self-preservation. Trait theories typically portray a static, or at least stabilized, view of personality structure as it currently exists. By contrast, psychodynamic theories of personality, to which we next turn, emphasize conflicting forces within the individual that lead to change and development. What are the three concepts of psychoanalytic theory *? Sigmund Freud theorized that the mind was divided into three parts: id, ego and superego. The function of the ego can be described as running interference between the id and the superego. It mediates between the drives of the id and the need for self-preservation. Sigmund Freud theorized that the mind was divided into three parts: id, ego and superego. Use APA referencing style.

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