Exercises

1. If the APR is 5% compounded quarterly, what is its equivalent continuously compounded rate?
2. The value of a portfolio is $4.77 million today with a beta of 0.88. If the portfolio manager explains the market will surge in the next three months and s/he intends to increase her/ his portfolio beta from 0.88 to 1.20 in just three months by using S&P500 futures, how many contracts should s/he long or short? If the S&P500 index increases by 70 points what will be her/his gain or loss? How about if the S&P500 falls by 50 points instead?
3. Write a Python program to price a call option.
4. Explain the empty shell method when writing a complex Python program.
5. Explain the logic behind the so-called comment-all-out method when writing a complex Python program.
6. Explain the usage of the return value when we debug a program.
7. When we write the CND (cumulative standard normal distribution), we could define a1, a2, a3, a4, and a5 separately. What are the differences between the following two approaches...