Question 1
- Create a simulated company that meets the following criteria:
- Multi-national with divisions in the U.S., Europe (Germany), and Japan.
- Has banking relationships in those same countries with loans priced in LIBOR and Prime Rate.
- Pension plan should be based in the U.S. and have exposure to S&P 500 equity index and Intermediate Corporate Bond Index with a 60% and 40% respective split.
- Evaluate your company’s exposure to risk.
- Formulate techniques and methods using derivatives to address risk.
- Structure a derivative management program.
- Apply option trading strategies as a method of portfolio insurance.
Discuss your plans to build a derivative management program for a firm and describe the progress you have made and any problems you have encountered.
Question 2
Prior to working on this question, watch these videos:
- Arbitrage Basics (Links to an external site.)
- Arbitraging Futures Contracts Part 1 (Links to an external site.)
- Contango and Backwardation Review (Links to an external site.)
Generate two multiple choice questions about the topics that are discussed in these three videos that you speculate could appear on a assignment that is similar in nature to the CFA assignment.
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