Introduction JetBlue Airways Corporation‚ or JetBlue‚ is New York’s Hometown Airline. The airline was‚ incorporated in‚ 1998‚ is a passenger carrier company. The Company operates various kinds of aircrafts‚ including Airbus A321‚ Airbus A320 and Embraer E190‚ providing air transportation services across the United States‚ the Caribbean and Latin America. JetBlue is the sixth largest passenger carrier in the U.S. (ref). The airline’s business model places emphasis on product and culture differentiation
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the exchange risk associated with the award payment being dispersed in British Pounds (GBP). He originally considered a forward contract or a spot contract‚ but is now investigating how currency options could help hedge against uncertain foreign exchange exposure. The CFO needs to decide whether or not options contracts might provide some benefit to hedge the currency risk. As of 1/14/86‚ Dozier has received a 10% deposit of the total contract value of £1‚175‚000.00. At the 1/13/86 exchange rate
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The Risk Profile A plot showing how firm value is affected by changes in prices or rates. Reducing Risk Exposure Although perfect hedging may be impossible‚ the normal goal is to reduce financial risk to bearable levels and thereby flatten out the risk profile. Forward Contracts: The Basics Forward contract—contract between buyer‚ who will take future delivery of the goods‚ and seller‚ who will make future delivery‚ for sale of asset in the
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EXC3613 Risk Management with derivatives Geir Høidal Bjønnes geir.bjonnes@bi.no 1 Introduction • Learning objectives: 1. 2. 3. 4. What is a derivative? What is the role of Derivatives and Derivatives Markets Firms’ risk exposures Hedging price risk with derivatives • McDonald: Chapter 1 2 Example • Consider a farmer that grows wheat and is expecting to yield 10‚000 bushels of crop in 3 months. He is afraid that the price of wheat might drop at the period
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An inspector calls is a morality play that challenges the ideas of an upper class Edwardian audience‚preistley achieves this both through the attitudes of the play but also through his implementation of personal morals. Sheila is initially presented as the stereotypical Edwardian daughter but soon freely presents her emotions‚ without the need for approval from her parents. Sheila is first presented as the stereotypical daughter who conforms to the wishes of her parents‚ “you’re squiffy” shows Sheila
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I. Topic 1. Introduction 1. Explain the difference b/w financial assets and real assets. Real Assets: (37%‚ 1%) Used to produce goods and services: property‚ plant & equipment‚ human capital‚ consumer durable‚ land‚ building etc (Material wealth of society: productive capacity‚ real asset) Financial Assets (debt‚ equity and derivative): Claims on real assets or claims on asset income. The largest financial asset of U.S. households is: pension reserve (real assets generate net income to the
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at an estimated residual value of $10‚000. If DTC buys the truck‚ its after tax cash flows would be the following: (Year 1) - 6‚339; (Year 2) -4‚764; (Year 3)-9‚943; (Year 4) -5‚640; all occurring at the end of respective years. The lease terms‚ call for a $10‚000 lease payment (4 payments
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terms‚ once financing charges are met. OPTION PRICING: The buyer of a call option gets the right to buy the underlying the underlying asset at affixed price‚ where as the buyer of a put option obtains the right to sell the underlying asset at a fixed price. Alternatives to the binomial model In the binomial option pricing model‚ the underlying asset and risk free lending or borrowing are combined to create a portfolio that had the same cash flows as the option being valued; we called this portfolio
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Introduction to Options A. Basics of options B. Payoff Charts for Options C. Basics of options pricing and option Greeks Fundamentals of options pricing ptions Overview of Binomial and Black-Scholes option pricing models verview Basics of Option Greeks D. Uses of Options NISM-Series-VIII: Equity Derivatives Certification Examination VIII: Page 1 of 2 NATIONAL INSTITUTE OF SECURITIES MARKETS An Educational Initiative by SEBI V. Option Trading Strategies A. Option spreads and
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Merton Electronics Case Study 1) Merton Electronics is subject to transaction exposure. Transaction exposure is the gains or losses realized from the settlement of specific transactions that are denominated in a foreign currency. There are two main types of transaction exposure: 1) Purchasing or selling on credit goods denominated in a foreign currency 2) Borrowing or lending funds when repayments is going to be made in foreign currency. In respects to Merton’s Yen payments they are subject
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