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Nick Leeson Case

1. Why did Nick Leeson sell numerous short straddles for each long futures contract he bought? When Nick Leeson was being promoted on the Singapore branch of the Barings bank, the strategy of the bank was to reduce the risk exposure by using a combination of one short straddle (combination of put / call) and for one long future. Since Nick Leeson used to be a specialist on Future contracts on Nikkei 225 and Japanese 10 years bond and was sure this market would arise. So he decided to sell disproportionate numbers of short straddles for each long futures position he took to pay the required initial margin deposits and new trades and also to meet the mounting margin calls…

Two-Step Tree and Butterfly Spread: Questions

1. A company enters into a short futures contract to sell $5000. The current future price is 250 cents per pound. The initial margin is $3000 and the maintenance margin is $2000. What price change would lead to a margin call? Under what circumstances $1500 could be withdrawn from the margin account? 2. Stock is expected to pay a dividend of Tk 10 per share in 2 months and again in 5 months. The stock price is Tk 500 and risk free rate of interest is 8% p.a. with continuously compounded for all maturities. An investor has just taken a short position in a 6- month forward contract on the stock. a. What are the forward price and the initial…

How Would you physicalise a charcter from a play

Too physicalise a character from a play you need to have studied the specific character in a reasonable amount of detail, so you can portray them correctly. To do this effectively you need to do various exercises, all which will help you grasp the character the best you can. There are several methods which can help you to understand a character eg: Hot Seating, Spider Diagrams, and Workshops etc. In our lesson we explored the character by Hot Seating, Character Profiles and other exercises. Hot seating is an extremely effective method, as it puts you on the spot answering various questions in your characters persona. It helps lock in the information about the character you’re playing. You need to understand…

Tifanny & Co. Harvard Case Study 9-296-047

In July 1993, Tiffany & Company reorganized its Japanese distribution channel by repurchasing its inventory from its Japanese distributor Mitsukoshi Limited. As a result of this action, Tiffany would assume the responsibility of establishing yen retail prices, holding inventory in Japan for sale, and controlling local Japanese management. Tiffany would be able to have control over retail price in Japan where historically had higher price. Under the previous arrangement, Tiffany contracted Mitsukoshi as the principal retailer in Japan and the transaction of wholesaling to Mitsukoshi was settled in U.S. dollar, under the new agreement, Tiffany now faced the risk of foreign currency fluctuations. Reasons for Managing Exchange Rate Risk Tiffany should actively manage its yen-dollar exchange rate risk for several…