subject :Investment analysis

Options trading may seem overwhelming at first, but it is easy to understand if you know a few key points. Investor portfolios are usually constructed with several asset classes. These may be shares, bonds, ETFs, and even mutual funds. REQUIRED:

a) Which one of the following options is more expensive? Show all calculations. i. A six-month put that carries a RM40 strike price on a share that is currently trading at RM35.84, given that the put trades at a 15 percentage-time value (i.e., the option is trading at a price 15 percentage higher than its intrinsic value); or

ii. A six-month call that carries a RM50 strike price on a share that currently trades at 54.75, while the call trades with a 12 percentage -time value (i.e., the option is trading at a price 12 percentage higher than its intrinsic value).

b) Call option of MAS share is RM2 and its strike price is RM 10. REQUIRED : Calculate the payoff and the profit to the option holder if MAS share price goes to ; i. RM 15 ii. RM 5

c) List THREE (3) characteristic of bearish market.