- L18
- Soal Asis Chp 15 Options Market
- Real Options - Petite GuideParfait Pour Commencer
- Final Projectcustomer satisfaction derrivative market of sharekhan
- Futures&Options an Introduction
- Derivative MKt. Question
- Options
- 77211044 Derivatives Market Dealers Module
- Lecture Option Strategies
- Opportunities and Impediments of Indian Stock Market
- ncfm_DMDM_sqns
- Options
- 1
- IM Problem Set 8
- Fin 534 Final Exam Part1
- PUT-CALL PARITY-1 (2).pptx
- Lecture 9 Option Strategies
- Options Pricing - Fuzzy Term Paper
- jj01kelley
- Fed. Sec. L. Rep. P 90,294 Robert B. Hunt, Ira Paul James, Ira and Paul James v. Alliance North American Government Income Trust, Inc. Alliance Capital Management L.P. Alliance Capital Management Corporation Alliance Fund Services, Inc. Wayne D. Lyski Robert M. Sinche and David H. Dievler, 159 F.3d 723, 2d Cir. (1998)
- Paper 14 Solution
- Socio-Eco-6
- International Finance W2013
- Carbon Update 16 April 2013
- Derivatives NSE
- Equity
- A Study Pricing Digital Call Options Using Numerical Methods
- Limba Engleza Si Comunicare de Special It Ate 2
- finlmath
- Derivatives(2)
- Setelah Penggbungan Ihsg Dengan Intp
- The Six Sigma
- Lalallalallalal Tugas Ga Jelas
- Money and Capital Market

023143011

Due Date: May 25, 2017

**Submission: Via email to fhputra1@gmail.com or assignment drop box via Google
**

Drive

Problem A Bond Valuation

**Blake Corp., a pharmaceutical company based in Louisville, KY, issued bonds to
**

fund their expansions. You are an investor who is interested to invest in Blake

Corp.’s bonds. The bond’s par value is $1,000 with coupon rate at 5%, yield to

maturity at 6% and matures in 10 years.

Question:

1. If the bond pays annually, how much is the bond price?

2. If the bond pays semi-annually, how much is the bond price?

3. Is this a premium or discount bond?

Answer

** Par Value x Coupon Rate
**

$ 1000 x 5% = $50

Annually

1 1 $ 1000

Po = $50 x (6% − (6% ? 1,06)10

) + 1,0610 = $ ???, ???

Semi annually ($ 50)/2 = $25

Semi-annually

1 1 $ 1000

PO = $ 25 ? [3% − (3% ? 1,03)20

] + = $ 925, 123

1,0320

**Based On both of calculation see the price at the trade now are discount bond. Because
**

the trade result less than < $ 1000

Problem B / Commodities Futures

**Coco Jewelers will need 100 ounces of gold to manufacture their jewelries next year.
**

Today, at X1, gold spot price is US$ 1,250 per ounce. Coco’s CFO predicts that gold

price will increase one year from now. The CFO then seek for a futures contract at an

exchange for $1,300 per ounce of gold to be delivered next year at X2.

Coco Jewelers will assume loss of USD 100 / ounce (USD1200 – USD 1300) by entering into this contract.Question: 1.000 for 100ounces of gold. the company must . 3.200 per ounce? Show your work! Answer : If gold price is USD 1200 per ounce.000 in control. Coco Jewelers will assume loss of USD 10.1275 USD $ 1 = CAD 1.5%. 2. a Canadian cosmetics company based in Winnipeg. What happens if gold price at X2 equals to the futures contract price? Answer: If the Price of gold equals to future contract price. Because both the parties got not gain/loss. exports US$100..1 (1+2. a cosmetics specialty store based in Boston. The finance managers then did his research in at futures exchanges and figured out that: USD Spot: US$1 = CA$ 1. The payment will be made in full amount one year from now in January 1 X2.5%) IRP at n+1 = USD 1. Meanwhile.300 per ounce? Show your work! Answer : If gold price is USD 1400 per ounce. What happens if gold price at X2 is US$1. Because Betsy’s reports its earnings in Canadian Dollars.1163 So. Coco Jewelers will assume gain of USD 10.000 worth of lipstick to Saphero.01 = CAD 1.exports USD $ 100. Problem C / Currency Futures In January 1 X1 Betsy’s Corp. the parties is break event point. while US$ interest rate is at 1% Question: Under Interest Rate Parity (IRP) theory.10 = US$ 0.000 for 100ounces of gold. Because of Betsy’s Co. Coco Jewelers will assume gain of USD 100 / ounce (USD 1400 – USD 1300) by entering into this contract Meanwhile.000 for 100 ounces of gold (USD 100 x 100 ounces) and the counterparty will assume loss of USD 10. the finance manager concerns about the exchange rate risks against the US Dollars.9090 CA$ interest rate is at 2. find the optimum price of this futures contract? Show your work! Answer : IRP at n+1 = USD 1 * (1+1%) = CAD 1.10 CA$ Spot: CA$ 1. What happens if gold price at X2 is US$1.000 for 100 ounces of gold (USD 100 x 100 ounces) and the counterparty will assume gain of USD 10..

3. If LLY price at exercise date is $45/ share. hence decides to buy $3 call options to buy LLY stock at $50 strike price. 2. and then sell the share to market price at $ 55/share. the exporter will be gained by anticipating the appreciation of the CA. and Jeremy cancelled by his call options. what happens to Jeremy’s call options? Answer: Assumption. Jeremy must pay $ 3/call option per-share.1163/usd What happens if the spot price at X2 is higher/lower than the contract price? Explain! Answer a) If the spot price at X2 is < the spot price at X1. what happens to Jeremy’s call options? Answer: Assumption. LLY’s stock is trading at $50/share and Jeremy. In these case we can say “Called in the money “ . SELL at CAD 1. So. If Jeremy will be buy share of LLY at strike $ 50. the exporter will loss. Jeremy will let the “call option to expire out and lost 100%” of her $300 options from the premium ($3 x 100 shares). Problem D / Options Eli Lilly (LLY) is a pharmaceutical company based in Indianapolis. thus the profit is $ 2. what happens to Jeremy’s call options? Answer : If Jeremy will be buy share of LLY at strike $ 50. Jeremy Will be Losses $ 8/share. Extra Credit for Problem D: . This is “called out the money”. And jeremy’s got profit ($ 2 * 100share) = $ 200. If Jeremy will be buy share of LLY at strike $ 50. a finance student at Harvard. Exercise date is one year from now. is interested to buy 100 shares of LLY next year when he graduates from Harvard and receive his $10. IN. If LLY price at exercise date is $53/share. b) If the spot price at X2 is higher than spot price at X1. Question: 1. If LLY price at exercise date is $55/share.000 graduation gift from his grandfather. Jeremy forecasted that LLY’s stock price would eventually increase. and then sell the share to market price at $ 53/share. and then sell the share to market price at $ 55/share.

000 .$ 5.000 . And Now. Jeremy have money $ 4.700.$ 300) = $ 4. ($50 * 100 share = $ 5000) + Premium ( $ 3 call option * 100 share = $ 300). How much money does Jeremy has left to put in his savings account? Answer : Jeremy Buy share of LLY $100 at the strike $ 50/ strike share.Suppose Jeremy decided to buy the call options and 100 shares of LLY stocks. Jeremy Have money ($ 10. Now. So.000 from his father. .700. The graduation gift jeremy’s got $ 10.

- L18Uploaded byowltbig
- Soal Asis Chp 15 Options MarketUploaded byfauziyah
- Real Options - Petite GuideParfait Pour CommencerUploaded byram74_1999
- Final Projectcustomer satisfaction derrivative market of sharekhanUploaded byGunjan Bhatt
- Futures&Options an IntroductionUploaded byKoolmind
- Derivative MKt. QuestionUploaded by26amit
- OptionsUploaded byDennis Bacay
- 77211044 Derivatives Market Dealers ModuleUploaded byRahul Kumar
- Lecture Option StrategiesUploaded byKrlos Mb
- Opportunities and Impediments of Indian Stock MarketUploaded byMegha Khator
- ncfm_DMDM_sqnsUploaded byanon-969264
- OptionsUploaded byKoolmind
- 1Uploaded byGrey Lucia
- IM Problem Set 8Uploaded byZoon Kiat
- Fin 534 Final Exam Part1Uploaded bysurnj1
- PUT-CALL PARITY-1 (2).pptxUploaded byAabbhas Garg
- Lecture 9 Option StrategiesUploaded bysachin rola
- Options Pricing - Fuzzy Term PaperUploaded byachal_premi
- jj01kelleyUploaded bydiscoverlibin
- Fed. Sec. L. Rep. P 90,294 Robert B. Hunt, Ira Paul James, Ira and Paul James v. Alliance North American Government Income Trust, Inc. Alliance Capital Management L.P. Alliance Capital Management Corporation Alliance Fund Services, Inc. Wayne D. Lyski Robert M. Sinche and David H. Dievler, 159 F.3d 723, 2d Cir. (1998)Uploaded byScribd Government Docs
- Paper 14 SolutionUploaded byNisarg Joshi
- Socio-Eco-6Uploaded bySougat Roy
- International Finance W2013Uploaded byBahrom Maksudov
- Carbon Update 16 April 2013Uploaded byDavid Boles
- Derivatives NSEUploaded byChinmaya Hegde
- EquityUploaded bycos60
- A Study Pricing Digital Call Options Using Numerical MethodsUploaded byBruce Haydon
- Limba Engleza Si Comunicare de Special It Ate 2Uploaded byAna Baum
- finlmathUploaded byMainframe for everyone
- Derivatives(2)Uploaded byGagan Bhati