Copulae in Mathematical and Quantitative Finance

Question: Describe about the Copulae in Mathematical and Quantitative Finance? Answer: Calculation: YEARS 2011 2012 2013 2014 2015 5 YEARS AVERAGE 2016 - FORECAST (HIGH) 2016 - FORECAST (LOW) m m m m m m m m REVENUE UK 40,766 42803 43582 43570 43573 42,859 47930.3 42265.81 EUROPE 9192 9866 9319 9267 8515 9,232 9366.5 8259.55 ASIA 9802 10828 10045 10309 9884 10,174 10872.4 9587.48 US 495 0 0 0 0 99 0 0 TESCO BANK 919 1044 1021 1003 1024 1,002 1126.4 993.28 GROUP REVENUE 61,174 64541 63967 64149 62996 63,365 69295.6 61106.12 TRADING PROFIT UK 2504 2478 2272 2191 467 1,982 EUROPE 527 529 329 238 164 357 ASIA 605 737 733 692 565 666 US -186 0 0 0 0 -37 TESCO BANK 264 225 191 194 194 214 GROUP TRADING PROFIT 3714 3969 3525 3315 1390 3,183 A spreadsheet of TESCO PLC is calculated for the period of 2011 to 2015 on the basis of the data provided. It is as follows: From the calculated table it can be said that, the group revenue was 61174 million in the year 2011, 64541 million in the year 2012, 63967 million in the year 2013, 64149 million in the year 2014, and 62996 million in the year 2015. This indicates that the average group revenue for the said five years is 63365 million. This implies revenue earning follows similar trend (Jaworski, Durante and Hardle, 2013). On the basis of the revenue earned in 2015, both high and low forecast for the year 2016 can be done and the result 69295.6 million for high forecast shows more revenue earnings, and 61106.12 million for low forecast shows lower revenue than the present, but not too low (McCraw, 2012). Similarly, the group trading profit was 3714 million in the year 2011, 3969 million in the year 2012, 3525 million in the year 2013, 3315 million in the year 2014 and 1390 million in the year 2015. This implies that with the decrease in the group revenue earning in the year 2015, the group trading profit has also decreased in the year 2015, as the group cost has increased in the year 2015 to 61606 million from 57460 million in the year 2011. The situation or the trend of the company for the five years can easily be understood and explained from the following line graph, column chart and pie chart (Ross, 2012): This line graph represents the group revenue of the company for five years. It is clear from the graph that, suddenly the revenue increases in the year 2012, then it started to fall slowly. This column graph represents the group trading profit of the company for five years. It is clear from the graph that, the highest profit occurred in the year 2012; the revenue earned was also highest. And the profit decreased most in the year 2015. This pie chart represents the group cost of the company for the five years, calculated by deducting the group profit from the group revenue (Thompson, 2012). This indicates that the cost was almost similar in the five years. References: Jaworski, P., Durante, F. and Hardle, W. (2013).Copulae in mathematical and quantitative finance. Berlin: Springer. McCraw, T. (2012).The founders and finance. Cambridge, Mass.: Belknap Press of Harvard University Press. Ross, S. (2012).Fundamentals of corporate finance. New York: McGraw-Hill. Thompson, T. (2012).Benchmarking the finance function 2012. Morrisotwn, NJ: Financial Executives Research Foundation.