You are asked to investigate and explore financial derivatives and their valuation.

(a) List three (3) differences between a futures and a forward contract. (12 marks)

You receive the beginning and the ending portions of a Python program. The purpose of the program is to price a financial derivative via Monte Carlo Simulation. You are asked to provide further elaborations for this Python program.

(b) Identify this financial derivative. Explain and support your view with two (2) reasons. (7 marks)

(c) Solve for the break-even point of this financial derivative on expiry date, round off the answer to two decimal places. (4 marks)

(d) Illustrate an approach to get a more precise answer for the computation. (2 marks)

Payoff = np.taxitum (0,S[1]K) preniun = nath.exp (rT) Payoff.mean( ) print('Premiun = $ ", premium) Premium = \$2.9041107723767987 Payoff = np.taxitum (0,S[1]K) preniun = nath.exp (rT) Payoff.mean( ) print('Premiun = $ ", premium) Premium = \$2.9041107723767987