Money market product

That is, a money market product quoted as a yield instrument, similar to a bank deposit or a certificate of deposit. The other class of money market products are discount instruments such as a Treasury bill or commercial paper. 

This chapter considers some of the techniques used to fit the model-derived term structure to the observed one. The Vasicek, Brennan-Schwartz, Cox-Ingersoll-Ross, and other models discussed in chapter 4 made various assumptions about the nature of the stochastic process that drives interest rates in defining the term structure. The zero-coupon curves derived by those models differ from those constructed from observed market rates or the spot rates implied by market yields. In general, market yield curves have more-variable shapes than those derived by term-structure models. The interest rate models described in chapter 4 must thus be calibrated to market yield curves. This is done in two ways either the model is calibrated to market instruments, such as money market products and interest rate swaps, which are used to construct a yield curve, or it is calibrated to a curve constructed from market-instrument rates. The latter approach may be implemented through a number of non-parametric methods. 

Catalysts are vital in the chemical indushy. The market for catalysts in the United States exceeds 2.0 billion, including more than 600 million for petroleum refining and more than 750 million for chemical production. Although these are large sums of money, the products made available by catalysts are far more valuable than the catalysts themselves. The total value of fuels and chemicals produced by catalysts exceeds 900 billion. 

Break-even, the market size size needed for revenues to cover ongoing fixed costs, is not the same as the payback period, the time required for cash flow to cover an investment. Break-even deals with steady state issues and is measured in either units of money or product volume payback period deals with the cash flow transient and is measured in units of time. 

Most regulatory authorities will want reassurance that the pharmacokinetic (PK) properties of the marketed product closely resemble those in which the pivotal studies are carried out. This is not unreasonable if the PK properties differ, then so may dose size and frequency. Occasionally, a phase III study will be bridged to the marketed formulation by the demonstration, for example, that two different tablets have the same PK profile. However, the risk is that different formulations will not turn out to possess the same PK profile either new pivotal studies will have to be conducted with the new formulation or registration will be delayed until the new formulation is adapted so that it does match the phase III test material. For inhaled drugs, this is especially difficult. Time and money is often lost in both cases. It is a risky gamble to leave development of the final formulation until the end of a clinical development plan. 

The textbook definition of a money market instrument is of a debt product issued with between one day and one year to maturity, while debt instruments of greater than one year maturity are known as capital market instmments. In practice the money market desks of most banks will trade the yield curve to up to two years maturity, so it makes sense to view a money market instmment as being of up to two years maturity. 

Quoting annualized rates allows deposits and loans of different maturities and involving different instruments to be compared. Be careful when comparing interest rates for products that have different payment frequencies. As shown in the earlier examples, the actual interest earned on a deposit paying 6 percent semiannually will be greater than on one paying 6 percent annually. The convention in the money markets is to quote the applicable interest rate taking into account payment frequency. 

The three general types of cost estimates needed are equipment cost, capital investment cost, and product cost. Equipment cost estimates are needed as part of the capital investment estimate, which indicates the amount of money that is needed to start the venture. Both of these estimates are reflected in the product cost estimate, which is important to both management and marketing groups. 

The requirements of the automotive industry are more demanding than some other industries. Automotive products have to be safe, reliable, and maintainable, protect the occupants, and have minimal impact on the environment in their manufacture, use, and disposal. The automotive sector is a very competitive market and as a consequence costs have to be optimized. There is little margin for excessive variation, as variation causes waste and waste costs money and time. Therefore several methods have evolved to reduce variation. Among them are SPC, FMEA, MSA, and many other techniques The automotive industry believes that the more their suppliers adopt such variation reduction techniques the more likely it will be that the resultant product will be brought to the market more quickly and its production process be more efficient. 

The revealed preference method is an indirect approach that is used in order to monetize use values. This method observes the real choice between money and the environmental goods. Methods often include observations of consumers or producers behaviour or actions, such as the hedonic price method and the production function method. The hedonic price method determines values from actual market transactions. These transactions are used to see how the price of a market commodity varies when a related environmental good changes, such as the effects of noise or air pollution on house prices. The production function method is used to estimate the value of the environmental effects on production. This method is suitable when consumption or production of a private good is affected by the environmental good. An example is the valuation of ground-level ozone levels by valuing the impact on the production of wheat or timber, which has market prices. The problem with the revealed preference method is that it does not contain all the individuals values that affect the WTP. 

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