Mr Jeng have the following information on Malaysia crude palm oil.

Date today = 1 Nov 2020 Spot price = RM3300 rf = 3% per year I tick = RM25 Annual storage cost = RM 99 per ton (3% per annum) 3-month Futures Crude Palm Oil : FCPO_Janc2020 = RM3500 6-month Futures Crude Palm Oil : FCPO_Aprilc2020 = RM3850 Suppose Mr Jeng with no current position in CPO is bearish (price going down) about CPO spot and futures prices over the next 3 months. Mr. Jeng interested to make profit in Malaysia derivative market.

a) Who is Mr. Jeng? Explain his role in the derivative market. [6 marks]

b) What is the appropriate strategy for Mr. Jeng based on his market expectation? [4 marks]

c) Demonstrate the profit or loss for Mr. Jeng suppose CPO price in 90 days (at maturity) [10 marks]

20% higher 20% lower

answer with 1 hour please