Misi Bhd is considering the following options:

Options Cost of Option ($) Striking Price per Share ($) Current Market Value of Underlying Stock ($)

Call (100 shares) 250 15 20

Put (100 shares) 280 40 35

Warrant (1 warrant may purchase 5 shares of stock) 10 38 45

Misi Bhd also needs to expand its facilities. To do so, the company must purchase an RM500,000 machine. The machine is available for lease or purchase.

Required: (a) Calculate the profit or loss associated with each option while disregarding brokerage fees. (13 marks) May - Aug. 2021 Final Examination BA208 Financial Management 2 Page 3 of 3

(b) Describe THREE (3) primary techniques that the company can use if it decides to lease the machine. (12 marks)