I am studying for my DERIVATIVE SECURITIES exams and the professor
gave us last year's test (below) to study from. While I think I
understands this material, I want to check my answers to make sure I
answered them correctly. That is where you come in to the picture. I
am looking for someone to complete the below and explain their answers
(by phone if needed). Accordingly, I ask that US and UK residents
only asnwer the following. Thanks. - wandering_texan1-ga
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I am willing to pay the advertised price to anyone who can :
(a) answer the questions (bullt points if possible)
(b) provide a graph for each
(c) provide the formula
(d) answer any questions I might have via email; or by phone if
necessary (US or UK resident only)
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QUESTION 1.
A fund manager thinks that the stock market is ready to go down by 10-15% over
the next 12 months. Unfortunately, he is not allowed to sell his
equity holdings or take short positions. He can, however, trade any
type of derivatives contract he likes.
a. Structure and discuss the details and workings of 5 significantly different
ways in which the investor can capitalize on his specific view? Support your
answer with payoff formulas and/or graphs.
b. Which of these solutions would you recommend, and why?
QUESTION 2.
A fund manager is firmly convinced that over the next year the stock
market will rise by at least 10%. Unfortunately, his mandate forbids
him to buy equity directly. However, he is allowed to purchase
short-term equity-linked notes.
a. Structure and discuss the details and workings of 4 significantly
different equitylinked notes that allow the fund manager to capitalize
on his specific view. Support your answer with payoff formulas and/or
graphs.
b. Which note would you recommend, and why?
QUESTION 3.
A fund manager is interested in buying some at-the-money ordinary put options on
the stock market index to benefit from the 10% drop in stock prices
that he expects to occur over the next year. He asks a derivatives
firm for a quote but after receiving the quote he considers the price
to be too high and dismisses the idea.
a. Structure and discuss the details and workings of 5 significantly different
ways (excluding changing the contract parameters, changing the reference
index, and buying less) in which the derivatives firm may be able to make the
put option cheaper and still do a deal with the fund manager. Support your
answer with payoff formulas and/or graphs.
b. Which solution would you recommend, and why? |
