Question
QUESTION 1 ( 2018) (17 MARKS) Julian who is a chief executive officer (CEO) of a financial institution in Malaysia wants to invest RM5 million
QUESTION 1 ( 2018) (17 MARKS)
Julian who is a chief executive officer (CEO) of a financial institution in Malaysia wants to invest RM5 million in any potential fixed capital portfolio three months time. Today, early September 2017, you observed that current Malaysian Government Securities (MGS) rate is 6.75% per annum and December MGS futures are 121.35. At the same time, the market scenario shows a falling interest rate for the next few months. In December 2017, the interest rate yield increased unexpectedly to 7.25% per annum and the MGS futures at 113.70.
Required:
- What is the best strategy to be taken by Julian? Explain.
(3 marks)
- Calculate the net effect for the above strategy.
(12 marks)
- Is she achieved her price objectives? Briefly explain.
(2 marks)
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Unlimited Business Financing
Authors: Trent Lee, Dr Chad Lee
1st Edition
1934275050, 9781934275054
