Question
2. a) When the December gold futures contract was trading at US$408 per 10 gram, expecting a fall in the price, Mr Joey Tuwai sells
2. a) When the December gold futures contract was trading at US$408 per 10 gram, expecting a fall in the price, Mr Joey Tuwai sells ten December gold futures contracts of 1 kg each in September. As expected, the gold prices fall with the December futures contracts trading at US$406 by October. Joey decides to close out the contract, and lock in his gain. Required: What is the amount of profit that Joey makes? Show your working. (4 marks) 2. b) You manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 27%. The Treasury-bill rate is 7%. One of your clients chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. Required: What is the expected value and standard deviation of the rate of return on your clients portfolio? (4 mark
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started