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Question 1 You are a remisier with Rakuzen Sdn Bhd. A customer who is very confident on the stocks of Malaysian listed firms would like
Question 1 You are a remisier with Rakuzen Sdn Bhd. A customer who is very confident on the stocks of Malaysian listed firms would like to invest in the Malaysian stock market. The FBM KLCI is currently at 890 points. Break-even call and put options are valued at 9 points and 5 points. The customer is interested to invest an amount of RM 2 million. The transaction cost for Stock Index Futures (SIF) is RM60 per contract. Required: (a) Explain THREE methods the customer can invest in Malaysian stocks. (4 marks) (b) Calculate the number of contracts needed, the cost of carrying out the trade and explain the different strategies used for the three methods. (6 marks)
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