Quantile Hedging Dissertation Example | Topics and Well Written Essays - 8250 words

Quantile Hedging - Dissertation Example As the report dceclares investors, security analysts, investment bankers, portfolio managers, bond-rating agencies, and corporate financial analysts are concerned about the insecurity of the returns on their investments. To minimize the risks of losing in the financial market, hedginga is done by these market traders. Hedging is a method to protect one's investments. Financial derivative instruments made hedging of these risks possible. Hedgers can sell the risks to speculators, or buyers of risks, but only when these risks show some form of stability. According to the report findings when the price of the securities increases, the trader gains profit from the main securities bought, but exhibits loss on the securities that were sold short. On the other hand, when the industry declines, the trader will earn from the short sold securities and lose from the long ones. Thus, hedging also brings risk when the securities appreciate in value. But the possible loss is not as much as when hedging is not done. The classic practice evolved into more sophisticated means as new mathematical tools or models are introduced. All types of hedging techniques generally involve distribution between the actual market value and theoretical value, and aim to gain profits when these values converge. Common types of hedging are applied in insurance, credit risks, foreign exchange and equities. An option is a contract which gives the holder the right to buy or sell stocks or securities either at a given price or a specified period of time but without any o bligation. These assets are called derivatives because their value is derived from another investment's worth. Call options give the holder the right to buy the securities while put options give the holder the right to sell. Option pricing strategies can be traced back in history since about 1877 when a book entitled "The Theory of Options in Stocks and Shares" was written by Charles Castelli. He presented in his book the speculation and hedging aspects of options but there was no significant theoretical base. There were several more dissertations done since then that presented the analytical valuation of options and pricing models (Rubash, n.d., p.3). The modern option pricing models being used now were based on these dissertations done decades ago. These option pricing models common to traders and analysts now are the Bachelier model, Black-Scholes model, Merton model, and the Cox-Ross-Rubinstein model or the Binomial Option Price model. Detailed discussions of

How the external environment shapes the organization ( BOSTON PIZZA) Essay

How the external environment shapes the organization ( BOSTON PIZZA) - Essay Example Boston Pizza has a strong brand positioning and is the first chain of restaurants to offer fat-free menu items (Henry 234). The restaurants have huge televisions and spacious parking areas thus appealing to the middle income consumers. The external business environment shapes the operations of Boston Pizza and the strategic choices of the management. The external environment is beyond the control of the management and strategic choices must be made to adapt to the fast changing external environment in order for the restaurant chain to attain competitive edge in the market (Henry 172). The external business environment consists of the political environment, economic environment, social-cultural environment, technological environment, legal environment and ecological environment. PESTLE (political, economic, social-cultural, technological, legal and ecological) environment analysis tool will be useful in analysing and understanding how the external business environment shapes Boston Pizza. The political environment entails the political stability, the trade restrictions and attitudes of governments towards businesses, pressure groups, conflicts, and wars. The current political environment in Canada, United States and Mexico is stable, but there are different pressure groups such as anti-obesity campaigners that have been advocating for health eating habits (Henry 78). The Canadian government has implemented several measures that aim at protecting consumer interests and welfare in order to safeguard the health of the population. In this case, Boston Pizza must implement health-conscious menus in order to attract higher number of customers and adapt to the changing political environment (Kachru 84). The restaurant chain is capable of expanding to cities that have political stability and minimal pressure group influences. However, the government may