--%>
Assignment Help - homework help

Explain marking to market will put rationality back in trade

Explain marking to market will put some rationality back in trading.

E

Expert

Verified

By marking to market, or using a model-based marking it is as close to it as possible, your losses will be plain to observe. When your theoretically profitable trade is doing badly you will observe your losses mounting up. You might be forced to close your position when the loss gets to be larger. Certainly, you may have been right in the end, only a bit out in the timing. The loss could have reversed, but when you have closed out your position previously then dangerous. Having thought that, human nature is such that people tend to hold onto losing positions too long on the assumption that they will recover, yet close out winning positions too early.

   Related Questions in Financial Management

  • Q : In financial theory how financial data

    In financial theory how financial data satisfied?

    		•
  • Q : What is half Kelly What is half Kelly?

    What is half Kelly?

    		•
  • Q : Rapid development of the interest rate

    If the cost benefit of interest rate swaps would probably be arbitraged away in competitive markets, what other explanations present to explain the rapid development of the interest rate swap market?All kinds of debt instruments are not always o

    		•
  • Q : Explain the denotation a utility

    Explain the denotation a utility function and how it can vary between investors?

    		•
  • Q : An example of distribution of

    Illustrates an example of distribution of individual numbers or random numbers.

    		•
  • Q : Help me Staind, Inc., has 7 percent

    Staind, Inc., has 7 percent coupon bonds on the market that have 13 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 11 percent, what is the current bond price?

    		•
  • Q : Find out the price of swap from the

    A corporation enters in a five-year interest rate swap along with a swap bank wherein it agrees to pay the swap bank a fixed-rate of 9.75 percent annually on a notional amount of DM15,000,000 and attain LIBOR - ½ percent. As of the second reset date,

    		•
  • Q : Theory of comparative advantage and

    How does the theory of comparative advantage associate to the currency swap market?Name recognition is very important in the international bond market. Without it, even a creditworthy corporation will determine itself paying higher interest rat

    		•
  • Q : Risks confronting an interest rate and

    Depict the risks confronting an interest rate & currency swap dealer.An interest rate & currency swap dealer confronts several distinct types of risk. Interest rate risk refers to interest rates altering unfavourably before the swap dea

    		•
  • Q : Evaluation the firm risk of a capital

    Give explanation on how to evaluate the firm risk of a capital budgeting project.

    		•