+1. Table 1 contains information on call and put index options. Use this information to constructbutterfly spreads and discuss the possible outcomes from these trading strategies.<Table 1<Call ExercisePriceCall OptionPremium<Put ExercisePut OptionPricePremium<K1<702550<702525<K247075<35<707535<K3<712525<712550< <3. Table 2 contains borrowing rates faced by Pingel Plc and Fereday Plc:<Table 24PingelFereday<←Fixed<Floating5.0%6.5%6-Month SONIA+0.1%<6-Month SONIA+0.5%<(i) Construct a plain vanilla interest rate swap that is negotiated through a financialintermediary. The financial intermediary requires a spread of 0.1% to facilitate the trade. <(ii) Explain and discuss the comparative advantage argument that underpins the rationale forthe swap.

Answer (1):(i) Plain Vanilla Interest Rate Swap Construction:In this case, we have two companies,…

Answered: + 1. Table 1 contains information on…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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9.2- Use the diagrams to answer the question q1- This question relates to Diagrams 1 - 4 from the 9.2 diagrams, each of which shows a set of portfolios plotted on a set of risk/return axes. Which diagram shows (in red) the set of feasible portfolios? Select one: a. Diagram 1 b. Diagram 2 c. Diagram 3 d. Diagram 4
The market portfolio has a beta of _________ Group of answer choices a. 0 b. 1 c. -1 d. 0.5
Q6. We have the following order book for stock ABC. BID PRICE (QUOTE) 99.80 99.70 99.50 99.20 99.00 ASK PRICE (QUOTE) ASK OTY 16 24 BID QTY 100.20 20 299 100.30 100.40 100.60 100.90 175 233 500 400 500 a) At what average price will you be able to buy 100 stocks of ABC in you have put in a market order? b) What is the impact cost if calculated from the mid-quote price? c) What will be the last traded price shown by the exchange just after your trade has completed?
Choose which portfolio is the optimal risk-return relationship if your client's return preference is greater than 0.405%. stock 1 MRNA MRNA MRNA MRNA MRNA stock 2 SBUX V FLATX BND SP500 0.422% 0.414% 0.347% 0.403% 0.419% return, 0.133% o 0.134% 0.136% 0.131% 0.123% 3.661% 3.686% 3.615% 3.514% 3.652% Op MRNA, SP500 MRNA, FLATX O MRNA, BND MRNA, V
Give only typing answer with explanation and conclusion
QUESTION 2. Consider a stock valued So at time t = 0, and taking only two possible values S1 = S, or Si = S1 at time t = 1, with S, < I1. a) Compute the initial portfolio allocation (a, 3) of a portfolio made of a units of stock and $B in cash, hedging the call option with strike price K e [S,,3¡] and claim payoff Si – K if Si = 3ı C = (Si – K)* $0 if S = S1, at time t = 1. b) Show that the risky asset allocation a satisfies the condition a € [0, 1]. c) Compute the Superhedging Risk Measure SRMc' of the claim C = (S1 – K)+.
please give me answer
What does it mean to assert that the delta of a call option is 0.7? How can a short position in 1,000 options be made delta neutral when the delta of each option is 0.7?
Assume that there are three different put options on a stock available and that all of them have the same expiration date. These three options have the following market prices $6, $3, and $1, and strike prices $40, $35, and $30, respectively. Construct a butterfly spread and show the relevant profits and losses. The use of graph is essential.
Explain the Monte-Carlo simulation process for a down-and-out call option for a Pick-n-donot-Pay stock. Explain how will you improve the efficiency of this simulation process usingantithetic variables
The market maker offers the following bids and asks with respective depths: Price Depth Bid 95 Bid 98 600 Bid 100 Ask 101 200 Ask 103 1000 1200 700 Ask 106 400 If you submit a market sell order with 1,771 shares, what's your weighted average execution price? Enter a number with two decimal points.
Consider the following Options Kuala Lumpur Index (OKLI) traded at BMDB: Option Type Option Price 33 20 12 18 Call Call ii. Put Put Exercise Price 750 780 Required: Illustrate graphically with relevant labels and working for following synthetic strategies: i. Long straddle Long strangle 750 780 +

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