- Case StudyHelp.com
- Sample Questions
SBS MBA Futures & Options Finance Assignment Questions and Answers
- Number of Words: 2500
Are you searching for SBS MBA Futures & Options Finance Assignment Answers Online? Casestudyhelp.com delivers Finance Assignment Help at an affordable price. We provide assignment help services with high-quality material. Our MBA assignment writers have experienced of the field. Hire the subject area experts for top-notch assistance.
Answer the following questions.
Q1. Suppose that a trader sells a September European call option to buy a share for $10 which costs $1.
Now we are at expiration, under what circumstances will the seller of the option (i.e., the trader with the short position) make a profit?
Under what circumstances will the option be exercised?
Draw a diagram (by hand and insert a photograph) illustrating how the profit from a short position in the option depends on the stock price at maturity of the option.
Q2. Arbitrage opportunies. Suppose that:
The spot price of a non-dividend-paying stock is $10 The 6-month forward price is $12
The 6-month US$ interest rate is 5% per annum Is there an arbitrage opportunity?
TIPS: present a table at time To (now) and T(in 6 months) to explain the arbitrage strategy and sum up all the cash flows to determine the profit of the arbitrage.
Q3. Compounding, present and future values
- 2 years annual compounding at 5% of $1000
- 2 years monthly compounding at 5% of $1000
- Present value of $1000 that will be received in 2 years with annual compounding at 4%
- How much annual compounding is equivalent to a 3% continuous
- How much continuous compounding is equivalent to a 4% semi-annual compounding
Q4. Explain why, due to the liquidity preference theory, different maturities should have different interest rates. Explain, using an example, short and medium term borrowing and lending.
Q5. Currently, the yield curve is inverted in the credit market. Explain, with professional/academic references, why this is the case. What does this mean for banks and how can this be linked to recent bank failures (Signature, SVB, etc.)?
TIPS: 300 words, use 3-4 references for this answer, no introduction or conclusion needed.
For REF… Use: #getanswers2002526