1.On November 15, 2019, Mary believes that the share market will suffer a correction (fall) of 20% in late February.It is November 15, 2019 and the ASX 200 index stands at 6780.If Mary commonly speculates using 5 SPI 200 contracts;

i)Outline the position she should take to profit from her expectations.

ii)Calculate her profit or loss on February 28^th, 2012 for this position if the bid and ask quotations for March 2020 SPI 200 contracts are quoted at 6582.0 and 6584.0 respectively.

iii)Outline the action she should take to realise this profit or loss.

Use the quotations from the ASX table above, while assuming that all futures trades are conducted using market orders, and document her various actions in the table below. Recall that SPI futures are valued at $25 times the index.

Date

Futures Market

Physical Market

15 Nov 2019

28 Feb 2020

March 2020

2.It is November 15^th 2019, and Jerry will need to borrow $5,000,000 for 90-days next June. If today's yield on 90-day bank bills is 1.0% p.a. and Jerry believes that 90-day interest rates may fall to 0.8% p.a. by June.What futures position should Jerry take to hedge this exposure?What borrowing rate would Jerry lock-in, if in June, the June futures quotations are 98.8800 (bid) and 98.8650 (ask), and September futures 98.8500 (bid) and 98.8650 (ask), while Jerry is able to issue 90-day bills at 1.70% p.a.?

Use the quotations from the ASX table above, while assuming that all futures trades are conducted using market orders, and document his various actions in the table below.

Date

Futures Market

Physical Market

15 Nov 2019

June 2020