Answer the following questions considering a bond portfolio comprising four bonds, each with face value of $1000, as follows:
A treasury zero-coupon bond maturing in 8 years and currently yielding 7%
BB-rated corporate bond maturing in 10 years, offering 9% coupon paid semiannually, and currently yielding 11%.
AA-rated corporate bond with a 9% coupon paid semiannually currently yielding 8% with 7.5 years to maturity.
AAA-rated corporate bond with a 7.5% coupon paid semiannually maturing in 10 years and trading at par.
Calculate the duration of the portfolio in years
Calculate the portfolio modified duration in years
What is the percentage change in the value of the bond portfolio with a decrease in interest rates of 50 basis points
Answer the following questions:
1- What are the limitations of PPP and Big Mac Index? Name at least two.
2- How Big Mac index is used to see if a country is manipulating its official inflation rates? (Read Manipulation section below )
3- Check the current prices of Big Mac (you can check online) in Turkish Lira (TL) and US dollar as of this week or this month. Use this information to calculate the implied value of TL using Big Mac index? Is TL undervalued? Is this consistent with the calculation the Burger economics’s website?
Critics of the presidency of Cristina Fernández de Kirchner in Argentina and many economists believe that the government has for years falsified consumer price data to understate the country’s true inflation rate. The Economist stated in January 2011 that Big Mac index “does support claims that Argentina’s government is cooking the books. The gap between its average annual rate of burger inflation (19%) and its official rate (10%) is far bigger than in any other country.” That year the press began reporting on unusual behavior by the more than 200 Argentinean McDonald’s restaurants. They no longer prominently advertised Big Macs for sale and the sandwich, both individually and as part of value meals, was being sold for an unusually low price compared to other items. Guillermo Moreno, Secretary of Commerce in the Kirchner government, reportedly forced McDonald’s to sell the Big Mac at an artificially low price to manipulate the country’s performance on the Big Mac index.In June 2012, the price of the Big Mac value meal suddenly rose by 26%, closer to that of other meals, after The Economist, The New York Times, and other media reported on the unusual pricing. A Buenos Aires newspaper stated “Moreno loses the battle”.
Answer the following questions for each
corresponding scenario in no more than 350 words each.
The manager at one of your locations calls you and wants to
terminate an employee for having religious quotes in his desk area.
The area is located in the back room and no one but that person has
access to the room.
Q1. Do you make the person remove them? Why or why not?
Q2. Can the employee file a lawsuit under the Civil Rights Act,
Title VII (1964)? Why or why not?
Q3. Explain why the manager might not have a case for making the
employee take the quotes down.
- Answer the following questions as they relate to implied
volatility in option pricing.
- What are implied volatilities? Can implied volatilities be
expected to vary for options on the same stock with the same
expiration price but different expiration dates? Why or why not?
- Why and how are implied volatilities used to quote option
prices? (5 marks)
- What are implied volatilities? Can implied volatilities be
It is known that a company is bidding for a very large
profitable contract. If they win the contract, their share price is
likely to rise. However, if they lose the contract, then their
share price will fall. How would you try to profit from those
scenarios using an option trading
Answer the following questions step by step.
1. In the following table, the possible returns of an asset under four possible future situations are listed. Find the average expected return and the standard deviation of returns.
2. . Toby purchased common shares of two companies on margin. The first share, ABC, is eligible for a initial margin of 60% and is presently trading for $117.35. The second share, DEF, is trading at $27.15 and has an initial margin of 50%. Your overall maintenance margin is 45%, meaning, at any time, the total value of your two stock portfolio must meet the 45% margin. (a) In dollar amounts, how much is the total margin requirement if Toby purchased 200 shares of ABC and 3000 shares of DEF? (b) If the price of ABC falls immediately to $103.25 and that of DEF falls to $23.45, how much (if any) will be the required deposit in his margin account? (c) If price of DEF remained at $27.15, what price of ABC would trigger the margin call?
3. Your broker, Tonald Drump, allowed you to short sell 3000 shares of Formica stocks on September 15th. The market price was $48/stock. Your initial margin is 50% and maintenance margin is 35%. On October the 12th, Formica stocks soared to $57/stock. Would Tonald ask you to deposit more money? Why or why not? If the answer is yes, assume that you did come up with the extra money. If the answer is no, obviously no new money has to be deposited. Now, on November the 16th, at your relief, the price of Formica came down to $34.75/stock. You decide to close your short position and Tonald returns your money. How much will he give you back? If you take your initial deposit (plus any margin calls if issued and met) as your investment, how much, in percentage terms, did you make from this short sale?
Answer the following questions about the study reported as Case Study 13.1. Explain your answers.
a. Was the study a randomized experiment or an observational study?
b. Based on your answer in part (a), can it be concluded that drinking an ice slushie before exercising in the heat causes time to exhaustion to be longer?
c. Could this study have been done as a double-blind study, a single-blind study, or neither? Explain whether this could have affected the results of the study.
Case Study 13.1
Beat the Heat with a Frozen Treat
If you are an athlete who exercises in hot weather, you probably realize that your endurance suffers from the heat. Researchers in Australia have some advice for you: drink a fruit-flavored slushie before hitting the track. In a study published in the journal Medicine and Science in Sports and Exercise (Siegel et al., 2010),* researchers asked volunteers to run on a treadmill in a hot room (34 degrees Centigrade, about 93 degrees Fahrenheit) until exhaustion. On average, the participants lasted almost 10 minutes longer before reaching exhaustion when they drank a fruit slushie before beginning, compared to when they drank fruit-flavored cold water
Ten healthy males with an average age of 28 and who routinely did moderate exercise were recruited to participate. This was a matched-pair design because all 10 men were given both treatments. The two treatments in the study were to drink a fruit-flavored ice slushie, with a temperature just below freezing, and to drink a glass of cold water with the same fruit-flavored syrup as the slushie, but with a temperature equivalent to water taken from a refrigerator. The order of the treatments was randomized for each participant, and they were administered a few weeks apart. To avoid a learning effect, each participant also did a practice run under the same conditions a few weeks before the first experimental run.
In each condition, the participants were told to run on a treadmill in a hot room until they couldn’t run any longer. The response variable was time until exhaustion. The parameter of interest is , the population mean difference in times that men similar to the ones in the study would be able to run until exhaustion, under each of the two conditions. We might also want to estimate the population mean times for each condition separately. Let’s define the difference for participant as time until exhaustion after slushie 2 time until exhaustion after cold water for . Then the hypotheses of interest are as follows:
Because the sample size is small , it is important to check for outliers. Although the authors did not provide the original data, they did provide plots, which showed that there were no outliers. The sample mean and standard deviation for the differences were minutes and minutes. Therefore, the test statistic is
Even with very low , the -value is essentially 0. Therefore, we can reject the null hypothesis, and conclude that there is a statistically significant increase in running time until exhaustion after drinking an ice slushie, compared to drinking fruitflavored cold water.
One of the disadvantages of a paired -test and corresponding confidence interval is that information about the individual means is not provided. Often they are not of interest, but in this example it is informative to know how long the men lasted until exhaustion under the two conditions. Here are the sample data and separate confidence intervals for the two conditions:
But wait, these confidence intervals overlap, yet we clearly rejected the null hypothesis that the population means were equal! What’s going on? Remember that the data were collected as matched pairs. The standard error of the mean difference (1.14) is much smaller than the standard error to accompany a two-sample -test (3.5). In fact, a twosample test, which would be in correct here, yields a t of 2.70 and a -value of .008, compared with the correct t of 8.3 and -value of essentially 0. You can see that it is very important to use the appropriate procedure.
Let’s evaluate this study using the checklist given on pages 531–532.
1. The p-value is reported to be essentially 0, so it is unlikely that a Type 1 error has been made.
2. The difference in the sample of almost 10 minutes, an increase from 40.7 minutes to 50.2 minutes, indicates that the result is of practical importance as well as statistical significance.
3. This study did not report that there was “no difference,” so this item does not apply.
4. This study used a very small sample size, so this item does not apply.
5. You can easily compute a confidence interval in this situation, and are asked to do so in Exercise 13.109. The confidence interval gives important information about how small or how large the population difference might be.
6. There were indeed multiple tests done in this study. In addition to the one reported here, the researchers reported the results of tests on body and skin temperature, heart rate, sweating rate, thermal sensation, and perceived exertion, for a total of eight hypothesis tests. Using the Bonferroni method, maintaining an overall level of significance of .05 would mean using .05/8 .00625 for each test. Fortunately, the main hypothesis of interest here still achieves statistical significance, even using
As a side note, this study was reported in the New York Times (Kolata, 2010), and a few of the other tests were mentioned, but the total number of tests done was not. As is often the case, the only way to learn the details of a study is to find the original journal article and assess it for yourself.
I need support with this Writing question so I can learn better.
Question 1: Review the strategic integration section. Note what strategic integration is and how it ties to the implementation of technology within an organization.
Question 2: Review the information technology roles and responsibilities section. Note how it is divided based on operations and why this is important to understand within an organization.
Need minimum 500 words (Question 1: 250 words, Question 2: 250 words)
No need any references.