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Boyles Law Definition in Chemistry

Boyle's Law Definition in Chemistry Boyles law expresses that the weight of a perfect gas increments as its holder volume diminishes....

Wednesday, May 6, 2020

Notes On Vanilla Interest Rate Swaps - 3467 Words

Introduction VANILLA INTEREST RATE SWAPS It is estimated that about 75% of American companies use derivatives. The main risk remains that most companies do not monitor their position frequently (Operational) and only few really understand the instruments (Intellectual). Moreover, as an off-balance-sheet item it reduces the public awareness of such items (accounting). This is the first case that there was a ruling by a judge for derivative instruments. PG had to pay only $35 million out of the $175 expected losses. PG, a leader in cosmetics, infant products, and grocery industries, offered almost 250 products to 5 billion consumers in 130 countries (Procter Gamble, Form 10-K 2-3 (1998)). Liquidating the two contracts cost the company $157 million which is one of the largest losses incurred for an American company. In comparison , Metallgesellschaft AG lost 1.36 billion in oil futures. The downside risks involved in these contracts are not fully understood, even by sophisticated investors. Chronology August 1993: As the maturity of an interest rate swap approached what PG had paid, that is an interest rate approximately equal to CP Federal Funds Rate - 0.40%, PG relied on BT for a swap contract replacing the interest rate swap in order to maintain BT’s financing structure. Although BT proposed a swap contract similar to the previous swap structure, PG refused on account of its inconsistency with PG’s risk factors. (Jongho Kim, â€Å"Lesson From Modern Debacles†.)Show MoreRelatedSwap Calculator876 Words   |  4 PagesContents: Interest rate swap basics​2 Excel work​4 References​8 Interest rate swap basics Swaps, being highly liquid derivatives, are not traded on stock exchange, but facilitated by over-the-counter (OTC) trading. Interest rate swap is an arrangement between two parties whereby they exchange one set of interest payment for another. The most widespread arrangement is when fixed-rate interest payments are exchange for floating-rate interest payment on some notional amount over theRead MoreEssay on Real World Exposure and CVA Simulation1131 Words   |  5 Pagesprices follow stochastic process with drift coinciding with the short rate r(t) being risk-free interest rate. dS(t)=S(t)[rdt+ÏÆ'(S(t),t) ã€â€"dWã€â€"^Q (t)] Instead, in real-world measure they follow more complex process, which embodies time and risk aversion of investors, namely: dS(t)=S(t)[ÃŽ ¼(S(t),t)dt+ÏÆ'(S(t),t) ã€â€"dWã€â€"^R (t)] or, equivalently, a process with real-world stochastic discount factors which depend on risk-free interest rates but also on asset prices itself. The form of this process with almostRead MoreA Brief Note On Financial Derivatives2698 Words   |  11 Pagesbasic, entities, known as the underlying assets. For example, the value of a stock option depends on the price of the relevant stock. Derivatives Markets In the financial markets derivatives are traded on: ï‚â€" Stocks ï‚â€" Stock indices ï‚â€" Exchange rates ï‚â€" Interest rates ï‚â€" Bonds ï‚â€" Credit risk ï‚â€" Commodities (such as electricity, wheat, oil) [4] Derivatives are traded in two different ways – they are traded either on an exchange or over-the-counter (OTC). The advantage of trading derivatives on an exchange isRead MorePdf, Doc7196 Words   |  29 PagesJournal of Economics 2 (2006) 129-146 EXCHANGE RATE RISK MEASUREMENT AND MANAGEMENT: ISSUES AND APPROACHES FOR FIRMS MICHAEL G. PAPAIOANNOU, Ph.D. International Monetary Fund Abstract Measuring and managing exchange rate risk exposure is important for reducing a ï ¬ rm’s vulnerabilities from major exchange rate movements, which could adversely aï ¬â‚¬ect proï ¬ t margins and the value of assets. This paper reviews the traditional types of exchange rate risk faced by ï ¬ rms, namely transaction, translationRead MoreInternational Financial Management5028 Words   |  21 PagesAnswer: a). Current Account 4). Interest rate swaps can be explained as an agreement between ___________ parties Answer: b). Two 5). Capital account convertibility in India evolved in August Answer: c).1994 6). Interest rate parity is an economic concept, expressed as a basic algebraic identity that relates Answer: b). Interest rate exchange rate 7). The two kind of swap in the forward market are Answer: d). Forward swap Option Swap 8). FEMA stands for Answer:Read MoreInternational Financial Management5022 Words   |  21 Pagesaccount. Answer: a). Current Account 4). Interest rate swaps can be explained as an agreement between ___________ parties Answer: b). Two 5). Capital account convertibility in India evolved in August Answer: c).1994 6). Interest rate parity is an economic concept, expressed as a basic algebraic identity that relates Answer: b). Interest rate exchange rate 7). The two kind of swap in the forward market are Answer: d). Forward swap Option Swap 8). FEMA stands for Answer: c). ForeignRead MoreRisk Management in the Airline Industry2570 Words   |  11 Pagesconsulting firm Mercer showed specifically which risks were prone to cause a decrease in shareholder value. The graph below details the results of this survey. (Zea, 2002) Risk events precipitating stock drops, 1991-2001 Figure 1. Source: Mercer Note that the above graph only shows the number of drops in stock price associated with each risk factor, and not their severity. As we can see, almost half of the value-destroying events are associated with strategic choices and competition. In anRead MoreAsset Swaps and Swap Spreads: Interest Rate Strategy21469 Words   |  86 PagesGale@morganstanley.com +44 (0)20 7677 7121 European Interest Rate Strategy Group +44 (0)20 7677 7528 July 12, 2005 Interest Rate Products Europe Asset Swaps and Swap Spreads Interest Rate Strategy The spread between swaps and bonds can be traded in many different ways. In this note we describe asset swapping methodologies in detail with particular emphasis on calculation of spreads, risks, and tracking of trades. The spread of bond yields to swaps is also commonly used to evaluate richness andRead MoreFundamentals of Futures and Options Markets 7e33967 Words   |  136 Pageslong-term Treasury bonds. Characterize the investors likely to use this contract. Most investors will use the contract because they want to do one of the following: a) Hedge an exposure to long-term interest rates. http://helpyoustudy.info b) Speculate on the future direction of long-term interest rates. c) Arbitrage between the spot and futures markets for Treasury bonds. Problem 1.18. An airline executive has argued: â€Å"There is no point in our using oil futures. There is just as much chance thatRead MoreBodie, Kane, Marcus Study Guide Essay40928 Words   |  164 PagesEssentials of Investments, by Bodie, Kane and Marcus 8th Edition, Teaching Notes Chapter 01 - Investments: Background and Issues CHAPTER ONE INVESTMENTS: BACKGROUND AND ISSUES CHAPTER OVERVIEW The purpose of this book is to a) help students in their own investing and b) pursue a career in the investments industry. To help accomplish these goals Part 1 of the text (Chapters 1through 4) introduces students to the different investment types, the markets in which the securities trade

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