8.1 Definition of Monetary Policy Government policy concerning money and credit conditions, especially the rate of growth in the money supply and the level of interest rates

Company a buys default protection from b to protect against default on a reference bond issued by the reference entity, C A makes periodic payments to In the event of a default by c A has the right to sell the reference bond to B for its face value

Weather derivatives: Definitions Heating degree days (HDD): For each day this is max(o, 65-4)where a is the average of the highest and lowest temperature in°F Cooling Degree Days(CDD): For each day this is max( o, A-65)

Credit ratings In the s&P rating system, AAA is the best rating. After that comes AA, A BBB. BB.B. and ccc The corresponding Moody's ratings are Aaa. Aa,a. Baa, Ba.b. and caa Bonds with ratings of BBB (or Baa) and above are considered to be investment grade

What loss level is such that we are y%o confident it will not be exceeded in n business days?

European Options on Stocks 13.2 Providing a dividend yield We get the same probability distribution for the stock price at time T in each of the following cases 1. The stock starts at price so and provides a dividend yield =q 2. The stock starts at price Soe q l and provides no income

A Simple Binomial model A stock price is currently $20 In three months it will be either $22 or

What is an enzyme? A biological catalyst that promotes and speeds up a chemical reaction without itself being altered in the process. Lowers the activation energies of a substance

Planning is a process that managers use to identify and select appropriate goals and courses of action for an organization. The cluster of decisions in actions that managers take to help an organization attain its goals is its strategy. 计划是管理者确立组织目标及所采取行 动的过程。计划包括定义组织目标,制 定全局战略以实现这些目标的活动

Temperature: measure of the motion of the individual atoms and molecules in a gas liquid or solid related to average kinetic energy of constituents High temperature: constituents are moving around energetically