Derivative and Fixed Income Securities - Question 1

Part I

Initial margin requirement= 60000 x 15.29 x 10% X 2 cents + $ 1200

= $ 3,035

Loan from broker = 60000 x 15.29 x 2 cents x 90%

= $ 16,513

 Margin call= 16,513/1-0.10= $ 18,347

Hence, price at which margin call will be recd= 18,347*100/(60,000*2)= 15.28 cents

Part II

Higher the volatility, higher the futures price. Hence, the initial margin requirement will also increase

Derivative and Fixed Income Securities - Question 2

Part I

Price of Call Option= Intrinsic value of call option + Time value of call option

Intrinsic value of call option (XYZ July 40)= $ 45- $ 40= $ 5

Since, price of one of the option is $ 8, it is price of XYZ July 40 call as time value of option can not be negative

Hence, time vlue of XYZ July 40 call = $ 3 and price is $ 8

Part II

Under Strategy A, the buyer of the option can buy share at a strike price of $ 40

Under Strategy B, the buyer of the option can buy share at a strike price of $ 50

Hence Strategy B offers a higher level of protection.

Derivative and Fixed Income Securities - Question 5

Part I

  • Theoritically, it is possible for an out of the money European call an in-the-money European put to be trading at the same price. Although, Intrinsic value of an out of the money European call option is zero, it can have more time value as time value of an option depends upon underlying price, exercise price, time to expiration, risk-free rate, volatility, and interim cash flows & costs.
  • By simultaneously buying a call and short-selling the underlying asset, we can create a synthetic short position in the put option.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help

Get It Done! Today

Applicable Time Zone is AEST [Sydney, NSW] (GMT+11)
Not Specific >5000
  • 1,212,718Orders

  • 4.9/5Rating

  • 5,063Experts

Highlights

  • 21 Step Quality Check
  • 2000+ Ph.D Experts
  • Live Expert Sessions
  • Dedicated App
  • Earn while you Learn with us
  • Confidentiality Agreement
  • Money Back Guarantee
  • Customer Feedback

Just Pay for your Assignment

  • Turnitin Report

    $10.00
  • Proofreading and Editing

    $9.00Per Page
  • Consultation with Expert

    $35.00Per Hour
  • Live Session 1-on-1

    $40.00Per 30 min.
  • Quality Check

    $25.00
  • Total

    Free
  • Let's Start

Get
500 Words Free
on your assignment today

Browse across 1 Million Assignment Samples for Free

Explore MASS
Order Now

Request Callback

My Assignment Services- Whatsapp Tap to ChatGet instant assignment help

Hire Certified Experts
Ask your Question
Need Assistance on your
existing assignment order?

We care

MyAssignmentServices uses cookies to deliver the best experience possible.
My Assignment Services acknowledges the academic integrity guidelines prescribed as per Australian Universities to ensure that the services, sample material, and study resources available on our website, in no way are utilised to commit academic misconduct of any type. All users of our services must adhere to and affirm acceptance of all conditions elucidated in our policy document on academic integrity.

Please accept and affirm the following to be able to continue exploring our website and services: I agree to NOT use any educational material, study resources, assignment samples, online mentoring services, available on the web domain www.myassignmentservices.com and all its subdomains to commit any academic misconduct. I have read and been made fully aware of the academic integrity policy of My Assignment Services and by clicking on the button below, I am in principle, wilfully and legally bound to adhere to guidelines of the academic integrity policy in whole and in part.
View Cookies policy | How we ensure Academic Integrity?