# EBF473 PSUPSMC Financial Risk Management in The Energy Industry Answers

**I tip very well**

**There will be 5 Questions each worth 20 points.**

**$15 per question seems reasonable**

**2 hours is plenty time to complete these 5 questions.**

**This is a timed exam you will have 120 minutes (2hrs) to complete it.**

**I will upload the exam once I have a tutor that is able to do the following down below.**

**Once I select a tutor I will upload the exam and you will have 2 hrs to complete the exam.**

**I need someone that is good at math(statistics). You should also know to calculate puts, calls, options, Stocks volatility.**

**Know how to use a normal Distribution chart**

**Questions might include**

**weather on a delta hedge****implicit volatility****Probability****Finding interest rates****Probability or paying off an asset****etc**

**Know how to do statistics and use the following formulas.**

**Gamma=Γ=(1/2π)^0.5 exp(-d^2/2)/(Sσ(T-t)^0.5).**

**The quadratic formula is (–b ±(b^2-4ac)^0.5)/2a.**

**If a variable X is distributed normally with mean u and standard deviation σ, Z=(X-u)/σ is distributed normally with mean 0 and standard deviation 1. The price of a call option on Weather derivatives is derived as follows:**

**Let X=the number of standard deviations the strike price is away from the mean.Y=-0.03X^3+ 0.22X^2-0.50X+0.4, price= Y*σ.**

**The Black-Sholes option pricing formula is C(S, K,T,t)=SN(d)- Pt(T-t)KN(d-σ(T-t^)^0.5)**

**Where d=[(ln (S/Pt(T-t)K))/(σ(T-t)^0.5)]+0.5σ(T-t)^0.5.**

**The 1st estimate of implicit volatility according to the M-K method is σ1=((ABS(LN(S0/X)+rT))*(2/T))^0.5.**

**The second estimate is σ^2=σ1– [(C1-C*(“true”)) * (2π)^0.5exp(d^2/2)/[S0(T)^0.5]].**

**(Both X and K above refer to strike prices.)**

**Know how to use a normal Distribution chart**