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Free research papers and essays on topics related to: rate risk

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  • A Risk Neutral Framework For The Pricing Of Credit Derivatives - 1,578 words
    ... A or B (6) The probabilities of transition from period 2 to period 3 are obtained as: {RN}02 {RN}23 = {RN}03 Where {RN}ij is the risk-neutral transition matrix from period i to period j Thus, {RN}23 = {RN}-102 {RN}03 Table -6 shows the risk neutral probabilities of transition from period 2 to period 3. From this table, it can be seen that P (F / EA ) = 0.074 and P (F / EB ) = 0.176. In addition, we know that P(EA) = 0.181 and P(EB) = 0.530 (refer Table -5a). Thus, the risk-neutral probability that Rs. 100 is received in period 3 is 0.074 x 0.181 + 0.176 x 0.530 = 0.107 The value of the derivative is obtained as 20.76 Table-6 Risk neutral probabilities of transition from period 2 to perio ...
    Related: credit, credit risk, derivatives, framework, neutral, pricing, rate risk
  • Euro - 1,043 words
    Euro The Most Interesting Event The progress of the Euro was the most interesting event occurring throughout this period. Never before has a currency united so many powerful economic nations. It is very interesting to see the progress it has made and changes it has influenced. In 1991 it was decided that the Euro would be introduced. It officially became the currency of eleven European nations: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain, shortly thereafter. Although the actually hard currency will not be introduced until January 1, 2002, it is possible to trade and complete transactions using this currency. This introduction allow ...
    Related: euro, european economy, central bank, corporate strategy, currency
  • The European Economic Community And The Euro Dollar - 1,655 words
    The European Economic Community And The Euro Dollar EEC and the Euro Dollar The European Economic Community (EEC), also known as the common market, was established in 1957 through the treaty of Rome signed between Belgium, France, Italy, Luxembourg, the Netherlands, and Germany in order to achieve economic cooperation. "It has since worked for the free movement of labor and capital, the abolition of trusts and cartels, and the development of joint and reciprocal policies on labor, social welfare, agriculture, transport, and foreign trade." Over the years, monetary union has been suggested by the members of the EEC and was finally attained on January 1,1999 when eleven European countries, whi ...
    Related: dollar, economic benefits, economic cooperation, economic costs, economic growth, euro, european commission
  • The European Economic Community And The Euro Dollar - 1,660 words
    ... ally guaranteed because Euroland now possesses the most independent central bank in the world, the European Central Bank (ECB). Central banks steer a country's inflation rate by using a variety of monetary policy instruments to lower or raise the general level of demand. The more independent a central bank, the less likely it is to succumb to the political pressures of its government to allow an economy to grow too fast or to finance excessive public expenditures which in turn leads to lower inflation. Yet history has shown that the central banks of many Euroland countries are not immune form political influence. That is precisely why the euro may be able to maintain long-term regional s ...
    Related: dollar, economic downturn, economic growth, economic stability, economic times, euro, european central
  • The Risk Management Of Asset And Liabilities By Developing Countries - 1,178 words
    The Risk Management Of Asset And Liabilities By Developing Countries The risk management of assets and liabilities by developing countries. Greater access to the international financial markets has bestowed many benefits on developing countries, but it has also exposed them to the vicissitudes of these markets. In addition to the macroeconomic challenges posed by large, potentially volatile flows, the sizable external foreign currency debt of many developing countries makes them vulnerable to swings in international exchange rates and interest rates and, often, they are tempted to speculative currency attacks. Indeed, prudent macroeconomic policies have at times been compromised by the fisca ...
    Related: asian countries, asset, developing country, management, rate risk, risk management, third world countries
  • The Risk Management Of Asset And Liabilities By Developing Countries - 1,154 words
    ... in the foreign currency value of its revenues. In addition to the potential capital losses that a government may incur on its debt portfolio, its ability to access international markets to refinance its maturing debt is likely to be hindered. Taking the above mentioned issues into consideration it will be advantageous for the lender as well as the borrower, which often is a sovereign nation to be knowledgeable on the risks involved, and commitment by parties in order to understand their obligations, since both could end up as losers.On the other hand the O.E.C.D also believes that risks associated with a large net currency exposure and the existence of deep and liquid domestic capital m ...
    Related: asset, debt management, financial management, management, management techniques, rate risk, risk management
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