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1. Explain how the following Greeks are applied in the management of financial risk? a....

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1. Explain how the following Greeks are applied in the management of financial risk? a. Delta b. Gamma c. Rho d. Theta e. Vega 2. Consider an investor had a portfolio of $10 million bonds in a long position suppose the confidence interval is 95%. The actual daily deviation of the portfolio over one trading year is 3.67%. a. What is the daily VAR of this Portfolio? b. What is the VAR for 1-month horizon (30 days)? 3. A portfolio consists of two assets, Bonds and stock. The two invested amount is $2,000,000 of which 60% is invested in Bonds and the balance is invested in stocks. The rate of return on the bonds is 15% with a standard deviation of 12%. The return on the stock is 25% with a standard deviation of 20%. The coefficient of correlation between the bond and stock is 0.75 or 75%. a. Calculate the portfolio expected rate of return? b. Calculate the risk of the portfolio

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