# 1 Adam, a speculator, is convinced that the stock market will fall significantly in the forthcoming.

speculator, is convinced that the stock market will fall significantly in the forthcoming
months. The current market index (14 August) level is 4997 (FTSE 100). He is
investigating a strategy to exploit this market fall: Sell five FTSE 100 Index
futures on NYSE Liffe with a December expiry, current price 5086. Extracts
from the Financial
Times

FTSE 100 Index Futures (LIFFE) 10 per
full index point

Assume: No transaction
costs.

i What would

speculator, is convinced that the stock market will fall significantly in the forthcoming
months. The current market index (14 August) level is 4997 (FTSE 100). He is
investigating a strategy to exploit this market fall: Sell five FTSE 100 Index
futures on NYSE Liffe with a December expiry, current price 5086. Extracts
from the Financial
Times

FTSE 100 Index Futures (LIFFE) 10 per
full index point

Assume: No transaction
costs.

i What would the profit (loss) be if the index rose
to 5500 in December under the strategy?

ii What would the profit (loss) be if the index fell
to 4500 in December under the strategy?

iii Discuss the relative merits of using traded
options rather than futures for speculation.

Q228;

1 On
14 August British Biotech traded options were quoted on NYSE Liffe as follows:

Assume: No transaction
costs.

a Imagine you write a December 180 put on 14 August.
Draw a graph showing your profit and loss at share prices

ranging from 100p to 250p.

b Add to the graph the profit or loss on the purchase
of 1,000 shares in British Biotech held until late December at share prices
between 100p and 250p.

c Show the profit or loss of the combination of a and
b on the graph.

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.