Question 8 (7 Marks)

William Smith, an Australian investor, has tremendous interests to expand his portfolio from a bunch of Australian stocks to the U.S. index and the Crypto currency. He would like to gain some information and suggestions from you.

a. William would like to know more about the Bitcoin and he has confusion on some terms. Please explain the following terms to him: Decentralized, Blockchain.

(2 Marks)

b. An interesting story about the stock GME (GameStop) has happened during the early year 2021. Please briefly summarize why some hedge funds such as Melvin Capital have significant lost during that period. After the significant lost reported from those hedge funds, Robinhood, Interactive Brokers and other brokers halt buying or investing in the call options of GameStop from retail investors in late January. What is your opinion on those restrictions?

*****Hint: this is a relative new event and not included in the textbook. Students are expected to do some research by themselves to finish the question. It is also an open question without too many restrictions on your opinions, thus most students should get a fair mark on this question. Please limit your answer within 300 words. Use your own words, and dont copy and paste from internet resources. You are expected to spend about 20-25 minutes on this question.