Article Writing Homework Help

I will pay for the following article Futures and Hedging Investments. The work is to be 1 page with three to five sources, with in-text citations and a reference page. Futures and Hedging Investments al Affiliation Futures and Hedging Investments Question Part A The stock market has a changing beta. We will use stock index features to change beta portfolio and determine the number of contracts that would help in eliminating market risk. Based on changing beta calculations, When N&gt. 0 the investor should buy the shares at minimal risk.

Let β* (desired beta) =1.35

Let β (portfolio beta) =1.00

Then N = β* – β= 1.35-1.00= 0.35

N &gt. 0 and therefore, the investor should buy the shares on short hedge at $ 50.

Part B

The hedging strategy adopted a short-maturity contracts and at N equal to 0.35 (N&gt.0), the number of contracts would not fall to zero even if the market falls at 10% by March 21. Therefore, the hedging strategy locks in February 1 price at $ 50.

Question 2

For Call

a) Intrinsic Value= underlying price-Strike price=$32.00-$30=$2

b) Time value=Premium-Intrinsic value= $3-$2=$1

For Put

a) Intrinsic value= Strike price –Underlying price= $30-$32=-$2

b) Time value=Premium-Intrinsic value= $7.5-$2=$5.2

Question 3

a. Options intrinsic value= $ 38-$3=$35

b. Dollar gain =$35-$30=$5

c. $ 40

d. on the option =17%

On the stock=21.88%

e. $5

f. $0

Question 4

a. Options intrinsic value= $ 24-$7.5=$16.5

b. Dollar loss =$16.5-$30=-$13.5

c. $ 35

d. Percentage gain on the option= 38.57%

Percentage loss on the stock= 45%

e. Maximum gain=$0

f. Maximum loss=$13.5

Question 5

Part A

Through market conventions, the company paying fixed rate would receive floating rate while organization that pays floating would receive fixed rate. Thus, Company B would pay fixed rate and receive floating (Subramani, 2011).

Part B

Firm A would receive floating from B

Part C

Firm A would receive floating while B would receive floating which would enable them to offset imbalances of decrease in LIBOR by 1%

References

Subramani, R. V. (2011). Accounting for investments: A practioners guide. Singapore: John Wiley & Sons.