What are financial derivatives? [1Mark] Explain the process of a financial Put Option with the...

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Finance

What are financial derivatives? [1Mark]

Explain the process of a financial Put Option with the help of an example. [2 Marks]

What is the difference between an Asset sensitive and a Liability sensitive firm? [1Mark]

If interest-sensitive assets (ISA) and interest-sensitive liabilities (ISL) of a financial firm are $125 million & $100 million respectively, what will be its interest-sensitive GAP (IS GAP)? Calculate the Relative IS GAP ratio for the same financial institution and comment, Is that firm Asset sensitive?

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