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Section B (Written) - 90 marks: in You may submit your answers for this section an Excel or Word document. Do not includ
Posted: Mon Nov 15, 2021 5:09 pm
by answerhappygod
- Section B Written 90 Marks In You May Submit Your Answers For This Section An Excel Or Word Document Do Not Includ 1 (101.58 KiB) Viewed 78 times
Section B (Written) - 90 marks: in You may submit your answers for this section an Excel or Word document. Do not include these answers in your MCQ answer book!
Question 1 (35 marks) You are currently invested in MTN and believe that the share price will move dramatically over the next quarter. Using the information below answer the
questions which follow. Current Price Put Exercise 167 168.67 Call. Exercise 168.67 Call Premium Put Premium 1.08 1.57 (A) Name the option strategy would allow you to benefit from excess volatility in the share price. (5 marks) (B) Draw the profit diagram (using Excel, the template provided, or ms paint - with all labels on all intercepts and turning points). (15 marks) (C) Calculate the total pay-off. (15 marks) Profit diagram of option strategy Profit (R) R135 R140 R145 R150 R155 R160 R165 R170 R175 R180 R185 R190 R195 R200 Stock Price at Expiration 7