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1. Is there an arbitrage in the following data? If this is the case, how much can be made risk-free? S=I20. K.= 120, r=6%. T=0.50, D0. c=10, ce6 2. A non-dividend paying stock has a 3-month forward price of 4100 and a put option price p=11.5. The three-month interest rate is I% (cont. compounding). Assuming no arbitrage is possible, what is the highest possible strike price K? 3. A company located in Canada and another company located in Australia discuss the opportunity of entering into a swap agreement directly without using the services of a financial institution:
Fixed Floating Company in Canada 2.2% 6-month LIBOR + 0.1% Company in Australia 5.8% 6-month LIBOR + 2.1%
The company in Canada needs to borrow a floating loan, while the company in Australia seeks loan financing at a fixed rate (semi-annually compounded). Principal amount and maturity for both loans are the same. a) The Australian company targets borrowing at a fixed rate of 4.9″%. Describe how the swap contract can be designed? What is the effective interest rate on the loan of the Canadian company? In addition, both companies discuss the option of entering into a second swap agreement: borrowing in foreign currency. The company located in Canada – in AUD, and the company located in Australia – in CAD, respectively:
CAD AUD Company in Canada 2.9% 3.5% Company in Australia 4.8% 4.0%
b) What is the total gain for both companies from entering into the second swap? Describe how the swap contract will be designed so both companies share the total gain equally without any exposure to exchange rate risk for the company located in Australia. c) Is the gain for each company under b) economically significant? d) Plot a graphical overview of the two swap contracts. 4. The following data is available: a dividend-paying stock with a stock price S=32 and strike price I@38. The risk-free interest rate is r=3.5%, the time to maturity is 12 months, and volatility is 10%. It is expected that a dividend of $2.5 will be paid after six and twelve months. a) Using DerivaGem*, an Excel tool provided with the textbook, find the price of a European call and European put on the stock. b) Using DerivaGem*, find the price of the European put on the stock if not paying dividends. When is the price of the put option equal to its intrinsic value? c) Using DerivaGem•, analyze the effect on the put and call option prices in a) with variations in dividends, 2) volatility, or 3) the time to maturity. Graph the results and discuss the reasons for the observed effects. •see Hull, p.838 — Chapter: DerivaGem; Select Option type: Black-Scholes — European

 

 

 

 

 

 

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Critical criminology has gained traction in recent years, with its devotion to questioning the definitions of crime and measurements of official statistics, its critical view of agents, systems, and institutions of social control, and the connections with social justice and policy change (Carrington & Hogg, 2002). Theories of critical criminology are rooted in the structure of society, focusing on power systems and inequality. This paper will focus on labeling theory and crimes of the powerful, as they have a certain dichotomy regarding public vs. private criminality. With labeling theory, those in power have the authority to decide what is the “norm” and what is the “other,” ostracizing the “other” from the rest of society. The stigmatization of public shaming for the common citizen is carried out in all aspects of public life – the labeled individual is looked down on by family, peers, community, and employers, and it is very hard for them to shake the label (Denver et al., 2017; Kroska et al., 2016). Regarding crimes of the powerful, those in power have the privilege to escape stigmatization and consequences of illegal actions. Those in power protect their own through deciding what is illegal or not, and deciding the consequences for illegal actions. These crimes occur in private and are often underreported and under prosecuted, allowing the powerful to escape consequences. Critical analysis will address these dichotomies, challenging theoretical assumptions and criminal justice practices to advocate for structural change. Labeling Theory ​Background Labeling theory discusses the structural inequalities within society that explain criminality. It can be traced back to Mead’s theory of symbolic interactionism in 1934, which discusses the importance of language regarding informing social action through processes of constructing, interpreting, and transmitting meaning (Denver et al., 2017, p. 666). From there, labeling theory was further developed with Lemert’s distinction between primary and secondary deviance in 1951, which explained how deviance of an individual begins and continues (Thompson, 2014). Finally, and perhaps most influentially, we have Becker’s labeling theory of deviance in 1963, which is the version of the theory that will be guiding this discussion in the essay (Paternoster & Bachman, 2017). In Becker’s labeling theory, he describes crime as a social construct:

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