QUESTION 3 (25 MARKS) (a) Caty wanted to hedge her company exposure in commodity, stocks, interest rates and currencies

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Question 3 25 Marks A Caty Wanted To Hedge Her Company Exposure In Commodity Stocks Interest Rates And Currencies 1 (37.15 KiB) Viewed 39 times

QUESTION 3 (25 MARKS) (a) Caty wanted to hedge her company exposure in commodity, stocks, interest rates and currencies on derivatives market. You are assigned by your bank manager to explain to her on the derivatives instrument that available in Malaysia market and recommend the appropriate hedging for her company. (17 marks) (b) Based on the table below, you invested 40% on Stock A and B and 20% on Stock C. Calculate the expected return on this portfolio. Year Expected rate of returns Stock A Stock B Stock C 0.18 0.13 0.05 1 2 0.17 0.10 0.12 0.07 3 0.02 0.13 4 0.12 0.09 0.16 5 0.12 0.08 0.28 (8 marks)