Question
2) Give two reasons why an investment strategy based on growth might under-perform or over-perform and investment strategy likely to be used by a value
2) Give two reasons why an investment strategy based on growth
might under-perform or over-perform and investment strategy
likely to be used by a value oriented investor.
a) Give two reasons why a futures contract would differ from a
forward contract.
b) Discuss how a long call position in a particular stock would
differ from a short put position in the same stock with the same
strike price and the same expiration date.
c) Explain why a call option on a specific stock with a specific
strike price and expiration date might be worth much more than
another call option on a different stock having the same stock
price, the same option strike price, and the same expiration date.
d) Explain what is meant by a protective put strategy when
holding a specific long stock position. How might the overall
outcome of this strategy differ from just holding a long position in
that stock. Consider the cases of either a higher close or a lower
close when the option expires.
e) What sort of market behavior might lead to a positive or a
negative outcome to an investor with a short straddle position.
Be specific about prices.
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