Steven is very good in speculating the market. All the time he will analyse the market based on the fundamental and tech

[answerhappygod]

Steven is very good in speculating the market. All the time he
will analyse the market based on the fundamental and technical
analysis. He noticed now the Kala Lumpur Composite Index (KLCI) is
dropped from 1255 to 978 in the past three months ago. Since the
market now is less volatile, the beta shows half riskier than the
market. Last three months ago, the beta shown at 1.1 after dropped
from 1.25.
He believes that he is able to take advantage on today market
conditions and as a speculator he is bearish on the underlying
market price in the near future. John has RM150 millions of
portfolio and he informed her broker to trade for two fifth of his
portfolio, the futures price evolved as follows. (Assume to
round off the contract number):
Day
Settlement Price
1
972
2
980
3
1025
4
999
5
981
Required:
(2 marks)
(CLO2:PLO1:C2)
Elaborate your
answers.
(3 marks)
(CLO2:PLO1:C5)
(2
marks)
(CLO2:PLO1:C4)
the
marked-to-market.
(8
marks)
(CLO2:PLO1:C4)
Why speculators prefer to speculate instead of hedging or
arbitrage? Discuss the pro and contra each of the
strategies.