Start Discovering Solved Questions and Your Course Assignments
TextBooks Included
Active Tutors
Asked Questions
Answered Questions
the formula explained in the above paragraph enables the investor to compute the value of a bond with an embedded option as the
the volatility assumption has a great influence on the arbitrage free value of the bond the higher the expected volatility the greater
the effective maturity of a callable bond can be anywhere between the first call date and its maturity date due to the
dow jones global index djgithe djgi aims to cover 95 of market capitalisation at country level as with ftse and msci there are the same 23 developed
global equity indexesas described earlier in this chapter there are several stock market indexes available which depict the performance of particular
sampp cnx 500here the stocks are included as per their respective market capitalization it includes companies which lead in their respective industry
otcei-composite indexthe otcei index is a pure price index the sum of the prices of all shares as of june 1993 is in the denominator the current
specialized stock indexesthe most regularly quoted market indices are those that include the stocks of the largest listed companies on a nations
bse-500 and sectoral indiceson august 9 1999 another new index was introduced in the market which was based on the data of 500 companies and
bond valuation would be relatively simple if interest rates exhibit little day-to-day volatility one could value a bond by discounting
stock market indicatorsstock indices can be organized by weighting the sample of stocks the stock indicators can be of four types price-weighted
it is not easy to determine the theoretical value of non-treasury securities however we can use the treasury spot rate for the valuation
short sales short sales of a security means borrowing of an underlying security by an investor from other investors who are holding it in
margin tradingsuppose an investor wants to buy 100 reliance energy shares whose market price is rs500 this transaction requires rs50000 but the
the following are various types of orders prevalent in the us marketsmarket order the most common form of order is the market order which means the
types of traders in future and option marketshedgershedgers use the futures and options market principally for risk management purposes because of
to understand how treasury spot rates are used to calculate the arbitrage-free value of the treasury security we will take imaginary
swing tradersswing trading is more or less similar to day trading except that swing traders will normally have a longer holding period during a
the main drawback of the tradition approach of valuation is that it discounts every cash flow using the same discount rate for example
day tradersday traders are basically the market markers they create liquidity in the market by frequently buying and selling stocks throughout the
characteristics of a stock exchangethe requirements for a stock exchange to act as a platform for buying and selling securities is dependant upon the
under this approach of valuation all cash flows are discounted using single interest rate discount rate for example consider
day count convention is a system used to determine the number of days between two coupon dates it is important in calculating accrued
electronic communications networksin traditional stock exchanges the buying and selling of stocks take place at a physical location only and the