The Greek letters: Scenario analysis with a reverse butterfly spread

Abstract. The management of risk is the goal of a financial institution that sells an option to a client in the over-the-counter markets. In addition to monitoring risks such as Delta(), Gamma () and Vega(v), option traders often also carry out, a scenario analysis. The analysis involves calculating the gain or loss on their portfolio over a specified period under a variety of different scenarios. The time period chosen is likely to depend on the liquidity of the instrument. The scenarios can either be chose by management or generated by a model.Keywords. Financial institutions, Scenario analysis, Risk management, Portfolio management, Reverse butterfly spread.JEL. G2, G10, G11, G13, G17, H2

Eurodollar Futures and LIBOR

The Chicago Mercantile Exchange is a global derivatives market place. The CME group is an order driven exchange that facilitates the trading of forward, futures and options contract on numerous products within key asset classes such as agriculture/ energy/metals, equities, interest rates, and exchange rates. Hence a very popular US interest rate futures contract is the three-month Eurodollar futures traded on the CME.Keywords. Eurodollar; LIBOR; Interest rates; Financial crises.JEL. N10; N20; E40; E50; G21

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Front Matte

Forecasting stock prices in the New York stock exchange

Abstract. Stock price prediction is one of the most relevant aspects in a stock market and world economies. Price is an important variable of concern in a sector where market and economic conditions vary over time. Efficient methods are needed to describe the trends and characteristics of stock prices. The performance of different time series models for analysis of stock prices is provided to determine the feasibility of techniques for the generation of results in the wake of economic decisions. Historical time series of monthly average price of stocks for Callon, Chesapeake, General Electric and Encana in the oil and gas sector of the New York Stock Exchange were analysed for the period 2012-2019. It was discovered that the New York Stock Exchange follows a random walk. A random walk implies uncertainty. Uncertainty implies high risk. Risk is directly related to profit. The fitted autoregressive integrated moving averages model used for forecasting shows that the predicted average stock price for the period 2021-2024 for Callon, Chesapeake, General Electric and Encana may reach United States Dollars 12.14, United States Dollars 7.34, United States Dollars 21.69 and United States Dollars 23.90, respectively. Therefore, cautious trading in the New York Stock Exchange was recommended for high profits to be achieved.Keywords. Convergence; Integration; Modelling; Stationarity; Variation.JEL. C5, C22, C32, E27, E32

A proven solution for Lebanon’s economic crisis: A currency board

Abstract. Lebanon is currently facing a financial crisis marked by rising inflation rates and a black-market exchange rate that is significantly diverging day-by-day from the official exchange rate. In this paper, the author dives into Lebanon’s financial history and what actions undertaken by the government since the civil war have led to this crisis. After a thorough examination of the current economy, the author compares Lebanon’s present day financial crisis to the one faced by Bulgaria in the 1990s and concludes that the implementation of a currency board is a viable solution for restoring the strength of the Lebanese pound and ushering in financial stability.Keywords. Currency board, Lebanon, Bulgaria.JEL. E58; G01; L25

Real options: Capital investment appraisal; estimating the market price of risk and application to the valuation of a new business

Abstract. The risk-neutral valuation approach to evaluating an investment avoids the need to estimate risk-adjusted discount rates, but it does require the market price of risk parameters for all stochastic variables. When historical data is available on a particular variable, its market price of risk can be estimated using the capital asset pricing model.Keywords. Real options; Capital investment appraisal; Market price of risk; New business valuation; Internet companies; Amazon.JEL. G30; G31; G32; N00; N80; M10

Germanys position in the world on globalization, technology and innovation

Abstract. Germany is situated in Central Europe bordering the Baltic Sea and the North Sea. Germany is the sixth largest country in Europe. The capital of Germany after a vote from the lower house Bundestag in 1993 was moved from Bonn in the West to Berlin in the East. Germany houses the European Central Bank and according to recent statistics the GDP of Germany stood at 4.0T. Germany is a powerhouse when it comes to technology and innovation. Well-known brands include; BMW, Mercedes, SAP, Volkswagen, Audi, Siemens, Allianz, Adidas, Porsche, Deutsche and Bosch.Keywords. Germany; Globalization; Technology; Innovation.JEL. E58; G01; L25

Assessment of governance and overall efficiency of Bulgarian farms

Abstract. This article incorporates the New Institutional and Transaction Costs Economics framework and suggests a practical approach for assessing the level and factors of governance and overall efficiency of Bulgarian farms. The evaluation is made on the basis of original micro-data collected by the managers of typical farms of different types and location. The "Nature of the problems in effective organization for major class farm transactions for securing needed factors of production and marketing of output" is used as an indicator for the comparative efficiency and adaptability (equal, lower, or greater to another farm/s or organisation/s depending on the extent of transacting difficulties) of individual farms. The study has found that the governance efficiency of farms is at a Good level but 60% of all farms in the county are with a Low efficiency and will likely cease to exist in near future. Major factors for inferior governance efficiency of Bulgarian farms are unsatisfactory efficiency in Supply of Necessary Labour, Innovations and Know-how, and Funding. There is a huge variation in the level and factors of governance efficiency of farms with different juridical types and sizes as well as in the share of farms with different levels of efficiency in each particular group. Furthermore, a strong correlation has been found between the level of governance efficiency and adaptability of farms, and diverse critical internal and external market, technological, institutional, personal, etc. factors that could feasibly increase the competitiveness of holdings. The study has proved that there is a big discrepancy between the new assessments of Governance efficiency with dominating traditional approaches for farm efficiency assessments based on factors' productivity. The study has also found that there was an improvement in the overall governance efficiency of Bulgarian farms compared to 2016. Nevertheless, the share of (good and high) efficient farms significantly declined during the same period. The suggested approach has to be further improved, and widely and periodically applied in economic analysis at various levels which require the systemic collection of a novel type of micro-data on farms governance and transaction costs..Keywords. Governance; Efficiency; Farm; Transaction costs; Factors, Bulgaria.JEL. D23; L22; M13; 017; Q13

Front Matter

Front Matte

Disruptive innovations in quantum technologies for social change

Abstract. The purpose of this study is the technological analysis of trajectories in quantum technologies to clarify new directions of disruptive innovations that can generate economic and social change. Patent analysis and models of time series are applied to assess the growth of quantum technologies. Findings  reveals that path-breaking innovations in quantum technologies are driven by quantum information, quantum communication, quantum optics and semiconductor quantum dots. This study can explain new directions in quantum technologies to support decisions of  R&D investments  towards growing technological trajectories generating having a high potential impact in markets and main benefic effects in socioeconomic systems.Keywords. Quantum technologies; Radical innovations; Disruptive innovations; Technological trajectories; Technological change; Social change.JEL. G2, G10, F21, F68, O53, K23