Put-Call Parity and Synthetic Positions Put-call parity is the principle used to generate synthetic longs and shorts. The equation equates …
Investors generally require a risk-premium in excess of the risk-free rate to justify holding equity securities. The risk premium in …
Reporting of Intercorporate Investments Reporting of intercorporate investments depends on the percent of ownership in the investee. There are four …
Mutually Exclusive Projects with Unequal Lives There are two methods we can use to pick projects when the project lives …
Cobb-Douglas Function The Cobb-Douglas Function states that GDP is a function of labor and capital inputs, and their respective productivity. …
Current Account and Exchange Rates Current deficits tend to lead to depreciation of the domestic currency. There are 3 mechanisms …
Mark-to-Market An application of the forward rate valuation equation is the calculating the mark-to-market value of a forward currency contract. …
Price vs Value of Forward Contracts First we look at the difference between the price of the forward contract and …
How to use a binomial interest rate tree to find bond prices One method that we use to value bonds …
Forward Rate Model The forward rate model allows us to derive a future spot rate from the current spot rate …