Company Profile

Date: 2015-10-07; view: 553.

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Unit 1

Study Guide

And OPTION PAYOFFS AND OPTION STRATEGIES

UNIT 1 – INTRODUCTION TO DERIVATIVE SECURITIES

1. What is a derivative security?
2. Describe the motivations for derivative securities.
3. What are the characteristics of futures contracts, swap contracts, and option contracts?
4. What factors influence the value of options (which are similar for derivatives in general)?
5. Define the key terms of an option contract, including:
1. Call and Put
2. Long and Short
3. Strike (or exercise) price
4. Underlying asset
5. Expiration
6. Premium
7. Contract specifications
8. American v. European
9. Moneyness
6. Identifywhen a call or a put is in-the-money, out-of-the-money, or at-the-money.
7. Describe why an investor would buy or sell a call or a put.
8. Graph the profit at expiration for each of the following. Additionally,identifythe maximum gain and maximum loss in each case:
1. long or short call
2. long or short put
3. covered call
4. protective put
5. long or short straddle
6. bull call spread

Supplemental Readings:

· “Modern Day Derivatives,” by J. Rubino, CFA Magazine, March-April 2004, pp. 40 – 43.

· “In Modeling Risk, Human Factor Left Out,” by S. Lohr, The New York Times, November 5, 2008, available online at:

http://www.nytimes/2008/11/05/business/05risk.html.

· Online Tutorial: http://www.cboe.com/LearnCenter/Tutorials.aspx

RZDstroy is a leading transport infrastructure construction company and one of Russia's top five companies in terms of sales of construction services.

The company was set up by spin-off of Russian Railways' construction subsidiaries in early 2006. Its fully-integrated structure includes business units specializing in production of building materials and units that carry out the full cycle of construction and installation works required for maintenance and development of the national railway infrastructure. Despite the severe weather conditions, our employees build railways that become a crucial factor for the development of entire regions and industries. Although RZDstroy has not yet become the world leader, it is a nationwide building and industrial contractor. We have set up operations in a number of regions of the Russian Federation, from Kaliningrad to Yuzhno-Sakhalinsk, and we are strengthening our presence in many other regions where we have already started operating.

The head office of the company is in Moscow. Its 18 construction subsidiaries act as project management centers and are located all over the Russian Railways (RZD) network. The company`s main sector of business is manufacturing products for railway, road, and civil construction applications. Today we are carrying out a great deal of projects, many of which have a high degree of complexity. The сompany is strongly involved in the implementation of the national “Railway Transport Development Strategy for the Period until 2030”. As the Russian railway industry is continually growing, the state's requirements to construction get increasingly stringent every year and do not merely match but often surpass the standards set by large businesses. Our track record in implementation of national-scale projects guarantees the high quality of work and we are proud of our financial performance. Moreover, RZDstroy is expanding the range of its operations. Now our company has become a truly multi-discipline building company. With the potential accumulated in railway construction, we are ideally positioned to implement successful projects in related sectors. We have a vast experience in industrial and civil construction projects such as railway terminals, sheds, residential and administrative buildings, and sports facilities.

RZDstroy's strategic objective is to increase its competitive strength in the global transport construction market. In order to achieve this goal, the Company focuses on developing of in-house capacities for dedicated activities that require a high qualification and improving the quality of management of high-complexity large-scale railway infrastructure projects.