Answer all.

At the beginning of February 2021 (t=0), you purchased June vanilla European put with strike $50 on the stock FINMCOM, which is due to expire today (June 4) and notice-to-exercise must be made by 5pm. At the time of purchase, the stock was trading at $58/share.

After the purchase, you documented the stock's movements: after steadily falling from February through to early April to reach a low of $49, the stock reversed and kept rising and closed at $65 by the end of April. From then, the stock reversed and kept falling to close at a new low of $47 yesterday. The stock has a volatility of 30% p.a., and pays a dividend yield of 2.51% p.a.c.c. The risk-free rate of interest is 3% p.a.c.c. Assume the stock will close with a new YTD low of $45 at 4pm today.

a. What's your market view on the stock at t=0? (2 marks)

b. What is the moneyness of the option at the end of April? Does it have any intrinsic value? (2 marks)

c. You time traveled back to t=0, so you know the future because history will repeat itself. If you could take a position in an exotic option to give the highest payoff, instead of the vanilla option you had (keeping the same strike). Explain whether you would switch and to which option? Compare payoffs of your original option with your new choice. Be sure to state potential cons with your choice. (6 marks)

d. As part (c), you time travelled back to t=0. This time, you can enter any position (or multiple positions) in the underlying and/or any derivatives learned in this course. What kind of positions and contracts would you trade to earn the highest payoff with the lowest cost? You may choose any time-to-maturity for the contracts, and any strike/delivery price between $45 and $65. You must enter all positions on the same day in early February (t=0) when the stock was trading at $58/share; but you may exit any of these positions between t=0 and today, as long as all positions are closed out or expire by today (June 4). Explain and include calculation where possible.

1. As a project, for your organisation (or any of your preferred organisation) manage and monitor producing budget requirements, including the following: 2 Evidence of your financial skills working with budgets and financial planning, including relevant principles and techniques O The key requirements of financial record keeping and auditing, relevant legislation and current requirements of the Australian Taxation Office Working with and supporting your team, assuming you have a team for the project @ Produce a final budget(s) and financial plan which includes recommendations for presenting to the appropriate senior person(s) in your organisation. 2. Prepare a report discussing your budget(s) and financial plan for presenting to the appropriate senior person(s), with the aim of reviewing and making recommendations for improvements. 3. Create a draft contingency plan for your financial management system. 4. How would you communicate to your team members the relevant details of current budget/financial plans for carrying out work tasks, if you need to negotiate further changes to the budget/plans? Ensure this is done with the relevant person(s). 5. For your organisation's financial planning requirements produce the following: ] A flow chart to show how you review and evaluate financial management processes _ A mind map to outline the planning approaches for financial management. 6. Provide information and evidence of monitoring processes that you would use at your place or work (or your preferred organisation), to ensure finances and budget are meeting their targets. Expert AnswerThe Importance of Good Record Keeping Good record keeping is an important discipline as you map out your financial goals. Imagine if you were notified of an IRS audit: How difficult would it be to get all the necessary past information together? If you have all the data in a single, well-organized place, however, you will be ready for any situation. How do you get organized? . One good record-keeping tip is to prepare your financial statements at least . Ideally, keeping will help you summarize all your transactions. . A ledger has sections where data is recorded for what you own or your ; what you owe or you ; your cash inflows or your ; and your cash outflows or your Key Steps in Record Keeping Keeping good financial records will save you time and make you money. If your records are organized, you'll have an easier time: . Compiling a budget . Pulling together an updated financial statement Accessing your records in an emergency Preparing your taxes . Preparing for an IRS audit Defending a credit report Which of the following are important steps in financial record keeping? Check all that apply. Safely disposing of unneeded documents Creating a master list of your key documents Keeping your documents in a place where everyone has easy access to them Maintaining records for tax and insurance purposes Ensuring that your family and/or executor can locate your financial documents Reorganizing your financial documents every three months at a minimum Making sure your financial plan is set in stone and inflexibleQuestion 15 (1 point} Suppose the banking system has assets {in billions] consisting of $100 reserves, $800 Loans and $200 T-bills. On the liabilities side of the balance sheet [in billions) it has $1000 deposits. What is the equity of the banking system [in billions, to the closest billion)? Your An swer: Answer units Question 16 (1 point} Which of the following assets would you classify as being the most liquid? 0 checkable deposits 0 cash 0 silver bullion O T-bills You have been asked by the board of trustees of a local church to review its accounting procedures. As part of this review you have prepared the following comments relating to the collections made at weekly services and record keeping for members' pledges and contributions: The church's board of trustees has delegated responsibility for financial management and the financial records to the finance committee. This group prepares the annual forecast and approves major disbursements, but is not involved in collections or record keeping. No internal or independent audit has been considered necessary in recent years because the same trusted employee has kept church records and served as financial secretary for 15 years. The offering at the weekly service is taken by a team of ushers. The head usher counts the offering in the church office following each service. He then places the offering and a notation of the amount counted in the church safe. The next morning the financial secretary opens the safe and recounts the offering. He withholds about $100 to meet cash expenditures during the coming week and deposits the remainder of the offering intact. In order to facilitate the deposit, members who contribute by check are asked to draw their checks to cash. At their request, a few members are fumished pre-numbered, predated envelopes in which to insert their weekly contributions. The head usher removes the cash from the envelopes to be counted with the loose cash included in the offering and discards the envelopes. No record is maintained of issuance or return of the envelopes, and the envelope system is not encouraged. Each member is asked to prepare a contribution pledge card annually. The pledge is regarded as a moral commitment by the member to contribute a stated weekly amount. Based upon the amount shown on the pledge cards, the financial secretary furnishes a letter requesting members to support the tax deductiblety of their contributions. Describe the weaknesses and recommend improvements in procedures for: a. Offerings given at weekly services. b. Record-keeping for members' pledges and contributions