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ASSIGNMENT DETAILS
For all assignments in this course, it is highly recommended that you participate in the optional Assignment Discussion Board before you start working on your assignment. The assignment discussion will not be graded.
The following Course Outcomes are assessed in this assignment: MT483-4: Assess the use of derivatives for speculation and hedging. GEL-8.02: Apply Critical Thinking to use principles of sound reasoning.

For this assignment, you will be discussing the bond environment. You will identify techniques, characteristics, and the motivations involved in hedging.
If you participate in the Assignment Discussion Board, summarize your findings in your paper.
In a Word document, supplemented with Excel reports, if you think appropriate, please submit a minimum 2-page research paper that addresses all the items in the Checklist. There are no investments required this week. You may use any resource; you are not limited to your textbook. Be sure you give credit where credit is due using APA format and citation style.

Checklist

  • Explain the basic characteristics of options markets and individual options contracts.
  • Analyze how investors can make (or lose) money from put and call options by creating exposure and hedging it with those tools (quantify).
  • Identify techniques that can be used for hedging.
  • Describe the motivations of investors for utilizing options.
  • Design a use of options combination strategies, such as spreads and straddles, to address a hedging exposure you develop. Select the best solution you think would address the exposure.
  • Explain the function of futures contracts for speculators.

The questions’ response must exhibit strong critical thinking and appropriate analysis to select the best solution.
Directions for Submitting your Assignment: Before you submit your assignment, you should save your work on your computer in a location and with a name that you will remember. Compose your assignment in a Microsoft ® Word ® document and save it as Username-MT483 Assignment-Unit#.doc (Example: TAllen-MT483 Assignment Unit 7.docx). Submit your file along with your Excel spreadsheet if deemed appropriate by selecting the Unit 7: Assignment Dropbox by the end of this unit.