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(e) Stock Initial Price Final Price Shares (millions) ABC K25 K30 20 XYZ K100 K90 1 (1) Determine the portfolio initial and final value
(e) Stock Initial Price Final Price Shares (millions) ABC K25 K30 20 XYZ K100 K90 1 (1) Determine the portfolio initial and final value and the percentage change in portfolio value (3 marks) (2) Calculate the initial and final price-weighted index and the percentage change in the index. (3) Explain the weaknesses of the measure above (3 marks) (4 marks) (4) Calculate the market-value weighted index and the percentage change in the index. Compare that to the return of a portfolio that holds K500 of ABC stock for every K100 of XYZ stock(an index portfolio) (4 marks) (5) Calculate the profit or loss per share of stock to an investor who buys a call option on a stock whose price is K90 but a call option exercise price if K100 if the stock price at expiration is K105. (4 marks) 6) Calculate the profit or loss for a purchaser of a put option with the same exercise (4 marks) price and expiration?
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