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‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 3
FIN 405 – Financial Derivatives
Due Date: 25/11/2023 @ 23:59
Course Name: Financial Derivatives
Student’s Name:
Course Code: FIN 405
Student’s ID Number:
Semester: First
CRN: 11828
Academic Year:2023-24-1st
For Instructor’s Use only
Instructor’s Name: Dr Ghazala Aziz
Students’ Grade:
/10
Level of Marks:
General Instructions – PLEASE READ THEM CAREFULLY
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The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Assignment Questions from chapter 12,13 &14: (Marks- 10)
Q1. Q. How do swaps and forward contracts share similarities while also differing from
each other? (Marks 2.5)
Q2. For a $100 million equity swap with semiannual payments and an initial stock index
level of 2000, one party pays a fixed rate of 5.5 percent assuming 30 days per month and
360 days in a year. On the first payment date, if the stock index is at 2173, determine the
net swap payment, and specify which party makes the payment. (Marks 2.5)
Q3: Compare and contrast the similarities and differences between Forward Rate
Agreements (FRAs) and interest rate swaps. (Marks 2.5)
Q 4. How can a portfolio manager rationalize the acquisition of an inverse floating-rate
note? (Marks 2.5)
Note:
Each answer must not be less than 300 words
Answers
1. Answer2. Answer3. Answer4. Answer-