Fin 356 Financial Expert Project Assignment

Posted: May 7th, 2022

Fin 356 Financial Expert Project Assignment
Attention – this project, even though it is not long, it requires extensive financial knowledge. Superficial papers which do not include all the information can not be accepted.
Please submit this week a report that describes your hypotheses and trades in detail (a link is provided below the project description through which you should submit Deliverable 1). Make sure that your plan is as realistic as possible, and incorporates all premiums and margin/collateral requirements. For each hypothesis, please develop an exchange-traded derivatives trade that can monetize the view. Hence, derivatives that do not trade on exchanges, such as forwards, credit default swaps, or interest rate swaps, should not be used. Only use derivatives – do not use any cash products such as stocks or bonds.
Please assume that you have up to 1,000,000 to allocate to each asset class (for the purpose of premiums and/or margin).
Please assume that you will acquire the position sometime during this week and will hold it until sometime during the week of Module 12. Please do not develop dynamic strategies that require buying or selling between this week and the week of Module 12. So there will only be two relevant dates:
The date you enter the position, sometime this week.
The date you close out the position, sometime during the week of Module 12.
Project overview
Futures and exchange-traded options are widely available for the following asset classes:
Equities
Agriculture
For each of these asset classes, please develop a well-reasoned hypothesis regarding the relative performance of two assets within the asset class. A relative performance trade (otherwise known as a pairs trade) does not require you to identify whether a given security will increase or decrease or value. Instead, it requires the following:
1. Identify two assets within the asset class.
2. Identify which of the two assets you believe will outperform the other asset.
3. Long the asset that you believe will outperform and short the asset that you believe will underperform.
You can learn more about relative performance/pairs trades here: http://www.investopedia.com/articles/trading/04/090804.asp.
Project details
For each hypothesis, please develop an exchange-traded derivatives trade that can monetize the view. Hence, derivatives that do not trade on exchanges, such as forwards, credit default swaps, or interest rate swaps, should not be used. Only use derivatives – do not use any cash products such as stocks or bonds.
Please assume that you have up to 1,000,000 to allocate to each asset class (for the purpose of premiums and/or margin).
Please assume that you will acquire the position sometime during this week and will hold it until sometime during the week of Module 12. Please do not develop dynamic strategies that require buying or selling between this week and the week of Module 12. So there will only be two relevant dates:
The date you enter the position, sometime this week.
The date you close out the position, sometime during the week of Module 12.
Some data sources from which you can identify information include:
www.CBOE.com
www.CMEGroup.com
www.onechicago.com
http://finance.yahoo.com/futures
http://finance.yahoo.com/options
You may also use the Bloomberg Terminals available at Pace’s New York City and Pleasantville campuses.
Project deliverables
This project has two deliverables, as follows:
Deliverable 1: Please submit this week a report that describes your hypotheses and trades in detail (a link is provided below the project description through which you should submit Deliverable 1). Make sure that your plan is as realistic as possible, and incorporates all premiums and margin/collateral requirements. Your report should be 5 pages, single spaced in length and should include the following sections:
– A single-page summary of your trades (1 page in total).
– A discussion of your hypotheses (1 separate page per trade).
– A discussion of the trade that you implemented, including detailed numbers with supporting evidence from your data source (1 separate page per trade).
Helpful links:
http://www.investopedia.com/articles/trading/04/090804.asp.
www.CBOE.com
www.CMEGroup.com
www.onechicago.com
http://finance.yahoo.com/futures
http://finance.yahoo.com/options
Requirements: Around 5 Pages as indicated in the request above

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