‫المملكة العربية السعودية‬

Kingdom of Saudi Arabia ‫وزارة التعليم‬

Ministry of Education ‫الجامعة السعودية اإللكترونية‬
Saudi Electronic University

College of Administrative and Financial Sciences

Assignment-1
FIN-405-Financial Derivatives
Due Date: 29/09/2022 @ 23:59

Course Name: Financial Derivatives Student’s Name:

Course Code: FIN-405 Student’s ID Number:
Trimester: First CRN:
Academic Year:2022-22-1st

For Instructor’s Use only

Instructor’s Name:
Students’ Grade: Marks Obtained/Out of 10 Level of Marks: High/Middle/Low

General Instructions – PLEASE READ THEM CAREFULLY

 The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
 Assignments submitted through email will not be accepted.
 Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
 Students must mention question number clearly in their answer.
 Late submission will NOT be accepted.
 Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
 All answered must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism).
 Submissions without this cover page will NOT be accepted.
Assignment 1
Place of Submission: Students Grade Centre via blackboard.

Marks: 10 Marks

Assignment Question(s): (Marks 10)

Q-1. Explain the financial derivatives? Discuss the different types of financial
derivatives along with their features. (3 Marks)

Q-2. Discuss the major functions or roles of derivative markets in an economy?

(2 Marks)

Q3. The following call option prices were observed for a stock on July 6 of a particular
year. (5 Marks)

Strike Price Call

July August
155 11.00 11.80
160 6.50 8.00
165 2.80 5.50
170 0.90 3.50

The stock is priced at 165.5(S0) and ignore dividends on the stock. The expirations are
July 17 and August 21.

Compute the intrinsic values and time values of the following calls. Treat these calls as
American options for purposes of determining the intrinsic value and time values.

a) July 155
b) July 160
c) July 170
d) August 160
e) August 170