(21 QUESTION 1 MARKS) Today, June 2020 the downward in the market has attract the traders to grab the opportunity to ent

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21 Question 1 Marks Today June 2020 The Downward In The Market Has Attract The Traders To Grab The Opportunity To Ent 1 (105.24 KiB) Viewed 39 times

(21 QUESTION 1 MARKS) Today, June 2020 the downward in the market has attract the traders to grab the opportunity to enter the futures market. The expert in the market assumed that the economy will slowly rise in three months later. Therefore, Helena a dealer in his company try to protect his client portfolios in crude palm oil industry. He enters the market today for the contract between July and September. His client has 500 tonnes of CPO futures. As in June 2021, June CPO futures is RM1220, July CPO futures is RM1270, August CPO futures is RM1310 and September CPO futures is RM1345. While in July, the CPO futures price as spot month is RM1305, next month is RM1327 and the next one month is RM1364. Malaysia Delivery Clearing House (MDCH) currently is charging the cost of storage at RM10 per month and the interest rate for borrower is 5.5%. Required: a) Helena prefers to spread between today and the next two-months. Compute the spreading benefits and assume there is a commission charge of RM100 per round. (8 marks) (CLO2:PLO6:C2) b) Assess Helena strategy as above. (2 marks) (CLO2:PLO6:C3) c) What means of “futures”? Give a different of example to support your argument. (5 marks) (CLO2:PLO6:C2) d) Why there are different spreaders in the market? Elaborate. (6 marks) (CLO2:PLO1:C4)