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Assume you purchase 200 units of Chamali share at RM212 per share. To protect your investment, your remisier advise you to also purchase an option
Assume you purchase 200 units of Chamali share at RM212 per share. To protect your investment, your remisier advise you to also purchase an option as back up. Since share prices fluctuates all the times, and you scared risking your total investment, you agreed to the remisier's suggestion and proceed to buy the option at a strike price of RM212 per share. The option has an expiration date of 30 days and you pay RM800 as the premium. i. Calculate the total cost of your shares. (2 marks) ii. Identify the type of option that you should purchase. (2 marks) iii. Assume the price of the shares goes up to RM300 per shares: 1. Decide on your option exercise right. (2 marks) 2. Calculate the net profit / (loss) from the above investment. (2 marks) i. Assume the price of the shares goes down to RM150 per shares. 1. Decide on your option exercise right. (2 marks) 2. Calculate the net profit / (loss) from the above investment. (2 marks)
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