conclusion section S.ents are expected to write dearly am concisely, with appro.. In-san ore nn and references p.dad (Harvard wad.).
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1. -Ailgrnerit 1 mrea assignment is deigned b ....ma on top. Involving interest sate futures (Ch 6). hedging st.erees using futures (cn 3) and the global financial cnsis of 2007 (eh 0).
QuestrI1 (10 marks) (a) ...les LLC Is an American global investment bank and Instltutlonel securities firm heads ..red In New P.. The limn provides die. with .retal markets and financial advisory services, institutional brokerage, securities research. and asset management. This includes merge. and acquisitions, restructuring, and other financial advisory eery..
Jefferies manages large bond portfolios owned by Ins0tutio.1 Investors in She UK. Jimmy Connors . firm's chief portfolio manager has identified that yields on shore term bonds are TOM volatile Man the cerresponding yields on longereerrn bonds Specifically, Jimmy a. his colleagues have estimated tot the yield on 24year benchmark bogs changes by 10 basis points for eve, re basre print move In the yield on 5-year ....re Barclays Insurance h.dguadered in Lornon currently holds one million dol. of 5-year bonds nit modifi. duration 0 years. Jimmy wand to hedgtom terest rate . Inherent in this portfolio using Treond Mures contr.s which have a modifred duration of years band sellat a= XXXXXXXXXXHow many.tures .n.c. should Jimmy sere Suppe..., the mock, ed duration of the aforementioned portfolio is 8 years and Jimmy has decided to hedge the polfollore risk by selling short Treasury .curitios .1h modified duration 10 years. How many dollars' Both of Treasury bonds should Jimmy sell In order to minimize the sedance of the portfolio's position? (5 marks)
(b) Pm Wde your recornrne.elions en how one can use financial retures to hedge sisk in each Jere following clscum.nces, I. A bond holder owning a large face value of an illiquid bond thal she tea. to .11 ii. A bond holder has ereibited large prof. on one of her Treasuries and wa. to liquidate, however, she would rather defer the gain until the next .ti yearns 111.Deirdre Kelly IS expecting to re.ive.r annual bonus next month and she hop. to Imes) it in long-.n municipal bonds. she .lieves that 'Muni, today are selling at gulte areac. yields, a. she N c..esned that bond prices will H. over the nextlaw weeks. (5 milks)
(10 mad.) 0.cuss the role of dereafives In triggedng the 2008 financial crres and the European sovereign debt crisis W. count 1.000 words Note: AI least five references must be provided - Hull's book should nd be used as the main