Question 1: Explain the concept of financial derivatives and give examples.

Question 2: Explain share call and put options from the perspective of buyer and seller.

Question 3: The strike price of Ali Baba share put option is $160. The option premium is $5.00 per share while the spot price is $150 on settlement date. Calculate the net payoff for long and short positions of five put option contracts. One contract is 100 shares.

Question 4: Draw and explain payoff diagrams for buyer and seller of call and put options.