Faced by economies

 

 

 

q1

Attracting foreign direct investment (FDI) is considered one of the main challenges faced by economies. It is also one of the main factors that help develop the national economy since it contributes to increasing GDP growth rates in the host country, developing technical staff, creating jobs, transferring modern technology, and supporting competitive capacities. “Discuss the current investment environment in KSA, shed light on current legislations that are attractive for investment, and identifying the most important determinants of investment in KSA?

 

FIN-405: Financial Derivatives

Q1

Derivatives are used to manage financial risk. Do you agree? (100-150 Words)

Q2

The party with a short position in a futures contract has quality, timing, and delivery options.
Do these options increase or decrease the futures price? Provide your view

Sample Solution

In 350 B.C., Aristotle wrote of Thales the Milesian and “his financial device.” The “financial device” that Aristotle`s story described was, in fact, a derivative – possibly the first recorded derivative trade. Derivatives are contracts that allow businesses, investors, and municipalities to transfer risks and rewards associated with commercial or financial outcomes to other parties. Holding a derivative contract can reduce the risk of bad harvests, adverse market fluctuations, or negative events, like a bond default. In each derivatives transaction, just like in any stock or bond trade, there is one party that wants to increase their exposure to a specific risk and one party that is looking to take the opposite risk.

arian theory is based on the belief that a moral decision is based on the outcome of the action, if that action produces the most benefit and maximizes utility for the greater number of people in a population, then it is morally sound (Holland, 2015). Based on this perspective, banning of CEDs would benefit majority of people by leading to a healthier population. Energy drinks being consumed not only negatively impacts the person consuming it, but it also puts a burden on the healthcare system due to the increase in the amount of cases related to CED consumptions in hospitals. Outlawing the sale of CEDs to persons under 16 would minimize the amount of people being hospitalized as a result of consumption of these drinks and therefore, increase the utility of health care systems for everyone. Burden of emergency visits to the hospitals would reduce because according to studies hospitalizations due to energy drink consumption increased by a double between 2007 and 2011 (NCCIH, 2018). Utilitarianism perspective would support the outlawing because this would help in the reduction of hospitalization in Quebec which in turn would increase utility and benefit majority of the people.

Mill’s harm principle believes power can be justly exercised over members of a community even against their will, when it is an act that will prevent harm to others (Holland, 2014). This principle would support the outlawing the consumption of Caffeinated Energy Drinks among persons younger than 16, this is due to the fact that other actions put into place to reduce consumption in the past have not been effective. There have been different measures put in place by the government in other to restrict the way these CEDs are produced and also consumed (NCCIH, 2018). The harm principle would support outlawing of Caffeinated Energy Drinks by Government of Quebec because energy drinks have a lot of side effects which are more dangerous to children and young adults (NCCIH, 2018). Although, these regulations have helped reduce the health impacts that are associated with consumptions of these beverages, outlawing them among persons under 16 years of age would help curtail the harms associated with them among these grou

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