StudentShare solutions

# Treasury and risk management - Essay Example

## Extract of sample Treasury and risk management

60 165 28 -\$28.00 Do Not Exercise \$32.00 Long Share Profit or Loss = Current Stock Price – Spot Share Price For instance, when current stock price is \$121 and the Purchase price is \$171, the Long Share Profit or Loss = \$(121-171) = -\$50. Option Value = Strike Price – Current Stock Price For Instance, when the strike price is \$165 and the current stock price is \$121, the Option Value = \$(165-121) = \$44 (In-the-Money) Long Put Profit & Loss = Max [(Option Value – Premium paid), Premium paid] For Instance, when the premium paid is \$28, Long Put Profit & Loss = Max [(44-28), -28] = \$16 The option will be exercised only when there is a Long Put Profit otherwise the option will not be exercised and the loss will be limited to the initial premium paid. Hence, this strategy is also known as the ‘Protective put’ strategy. For instance, when current stock price is \$121 and premium paid is \$28, the option should be exercised. Similarly, for different current stock prices, the protective put strategy can be computed. ...
e), Premium paid] = Max [(165-121), -28] = \$34 So, from the above it can be said that if the put is at \$121, only loss of \$34 and if put is not exercised, loss will be \$50. Hence, the breakeven share price is \$199. It implies that the hedger will start to make profit after crossing the breakeven point of \$199 when all premiums are paid and initial purchasing cost of shares are taken into consideration. Section (c) The protective put strategy diagram along with the breakeven point is shown below, Answer 2. Section (a) Introduction Many analysts believe that the European economy is likely to face more turmoil before it finally gets better. Greece owes a total debt of €490 billion to various banks in Euro zone. Analysts believe that if Greece fails to repay its debt then the impact of default will be directly felt by the small as well as the large businesses in UK. With such a huge amount of debt, if Greece really fails to repay and leave Euro, then the consequence of that will be mostly felt by the various banks in UK and Euro to whom Greece owes. Argument Defaulting of Greece or separating Greece from the Euro zone may not be suitable options to revive the European economy since the implication of both outcomes will paralyze the European economy as well as the global markets. This is mainly because of the fact that the banks do not work in isolation. They are connected to each other through debt guarantees or collaterals and insurance products (Mylonas, 2011, pp.81-84). Assuming that the Greece will default and then the most probable impact will be that about eighty percent of British banks will have less money to lend out to individuals and businesses. Consequently, if the bank’s lending slows down then the consumer consumption will decline leading to deflation in ...Show more

## Summary

TREASURY AND RISK MANAGEMENT Table of Contents Answer 1. 4 Section (a) 4 Section (b) 5 Section (c) 6 Answer 2. 6 Section (a) 6 Introduction 6 Argument 7 Conclusion 9 Section (b) 10 Introduction 10 Argument 11 Conclusion 12 References 13 Bibliography 14 Answer 1…
Author : matilde20
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Treasury and risk management"
with a personal 20% discount.
Grab the best paper

### Check these samples - they also fit your topic

Treasury and risk management
It needs a high growth to attract labours that are unemployed in the agricultural sector and, thus, promote employment. As China does not have much in its way of social welfare payments, so, the authorities are aware that without job creation in the manufacturing sector they could face social unrest and high level of unemployment.
4 pages (1000 words) Essay
Risk management
The yield curve of U.S. Treasury securities is regarded as a market benchmark because it is frequently used as a vital reference point by fixed income investors in order to evaluate the market conditions. The slope of yield curve predicts the future economic activity and that’s why it is used by the investor as a forecasting tool in order to understand the movement in future economic activities.
8 pages (2000 words) Essay
Risk management
The introduction part defines captive insurance and stresses on its need to cover various business risks. Various types of captive insurance are described along with the kind of insurance business undertaken by them, with different captive roles. As the business group is Australian, the report discusses the impact of Australia’s DOFI legislation on the righteousness of the decision of the business to operate a captive unit for the insurance needs of the company in preferable locations, including Australia, Guernsey, Bermuda, and Singapore.
12 pages (3000 words) Essay
Marketing management
To go along with the current image of the sport new clothing and apparel are the demand of the day and designers are fashioning clothes are not just practical but attractive too. A number of
10 pages (2500 words) Essay
The Treasury Profile For Marks & Spencer PLC
It is having about 2,000 suppliers and employs about 78,000 employees. M& S controls about 11.2 percent market share in retail clothing and about four percent of UK food market. The major financial risks encountered by the M&S group are funding, liquidity,
14 pages (3500 words) Essay
Integrated risk management (financial risk management)
A very good example is of Honeywell Inc. Honeywell has used an overall annual aggregate retention to manage its risks rather than using separate retentions for each risk. This does not only reduce premiums paid to
7 pages (1750 words) Essay
Treasury and risk management
Similarly, for different current stock prices, the protective put strategy can be computed. Hence, the breakeven share price is \$199. It implies that the hedger will start to make profit after crossing the
6 pages (1500 words) Essay
JP Morgans Financial Risk Management
The procedures and practices of the risk management model adopted by the bank were inadequate in providing enough control over various price and market risk models it adopted, especially within the chief investment office; The oversight and governance
1 pages (250 words) Essay
Bit coin in monetary economics
The use of bit coin has made it easy for individuals to transact money across borders much faster. This essay aims at outlining the impact of bit coin the financial as well as in the current economy. The online treasury and
2 pages (500 words) Essay
TREASURY & RISK MANAGEMENT
Unlike other subsidiaries, Toyota Motor Europe Manufacturing had opted to manufacture only 24% of autos for European market in Europe, the rest was still being manufactured in Japan. The situation became more complicated when
15 pages (3750 words) Essay
Hire a pro to write