FIN379: Mr. Fauzi is an active trader. He believes that the current economic condition will give an impact on the prices of stock: Introduction to futures and options Assignment, MUM, Malaysia


Monash University Malaysia (MUM)

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FIN379: Introduction to futures and options

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  • Question: 1

Mr Fauzi is an active trader. He believes that the current economic condition will give an impact on the prices of stock. Based on forecasting, it indicates that the S&P 500 performance is better compared to the KLCI shortly. Mr Fauzi has the following available data:

  1. March 2018 S&P 500–2500
  2. March 2018 KLCI–1800
  3. Exchange rate per USD–RM4.30
  4. S&P contract value– USD250 times S&P 500 index
  • At maturity, the KLCI and S&P 500 close at 1900 and 2600, respectively. Show the profit or loss position in Ringgit Malaysia.
  • Explain what would happen if the contract is still open at maturity.

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Question: 2

  1. Explain any two (2) main differences between investing in the stock market (BMSB) and futures market (BMDB)
  2. A forecast indicates that S&P 500 would outperform KLCI shortly Therefore a spreader will take a position to take advantage of this situation Based on the information below, calculate the gross profit or loss in Malaysian Ringgit that the spreader may get from the strategy taken

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