University | Singapore University of Social Science (SUSS) |
Subject | FIN312: Mathematics and Programming for FinTech |
FIN312: Mathematics and Programming for FinTech Assignment, SUSS, Singapore Draw the payoff diagrams of portfolios 1 and 2 on the same figure, ignoring any transaction costs
Question 1
An investment analyst has formulated two investment portfolios consisting of options, based on his market outlook in the coming month. The options are held to expiry.
- Portfolio 1 is a portfolio holding 10 stock A call options struck at K.
- Portfolio 2 is a portfolio holding 10 of stock A call options struck at K and shorting 10 units of stock A call options struck at K + ∆K.
(a) Draw the payoff diagrams of portfolios 1 and 2 on the same figure, ignoring any transaction costs. Hence, determine and clearly explain the investment outlook – — bullish or bearish, of the analyst.
(b) If K = $100, ∆K = $10 and the final price of A is $110, which one of the portfolios will have a higher return? Explain your answer clearly.
The investment analyst wishes to know the probability that the return of Portfolio 1 is greater than 12%. He can obtain the probability figure by
- Method 1: Calculating the probability, assuming the returns follow a Normal distribution with a mean of µ and standard deviation of σ. The values of µ and σ are obtained from the historical returns.
- Method 2: Counting the number of incidents where historical returns are
greater than 12%, i.e. Probability= Count of return data points > 12% Total count of return data points
(c) Which one of the methods will you recommend? Explain your answer carefully.
Question 2
A company is offered an investment where the following cash flows are being observed:
The investment provides a cash flow every 6 months and the interest rate environment is as stipulated in Table 1.
(a) Given the following cash flows, make use of discrete compounding to evaluate the present values of the cash flows from the investment, corrected to two (2) decimal points.
Buy Custom Answer of This Assessment & Raise Your Grades
Looking for expert assistance with your TMA, individual assignments, essay writing in FIN312: Mathematics and Programming for FinTech at the Singapore University of Social Sciences (SUSS)? Look no further! Our professional team offers top-notch assignment writing service in Singapore. With our help, Singaporean students can easily pay our experts for guidance and support throughout their course. Whether you need assistance with complex mathematical concepts or require a well-written essay, our team is here to ensure your success. Don't let the challenges of your coursework hold you back. Contact us today and let us take your academic performance to new heights!
- Imagine that you are currently working for a precision medicine startup: Machine Learning Paper Review in Precision Medicine, Written Assignment 1, NUS, Singapore
- Go Business offers PSG solutions for enterprises in Singapore: Collective Intelligence and Entrepreneurship, Assignment 1, JCU, Singapore
- Design an ontology based on- Accidents can be categorised as chemical, electrical, fire, kinetic or liquid: Collective Intelligence and Entrepreneurship, Assignment 1, JCU, Singapore
- Project Control Monitoring, Assignment, HU, Singapore: Deliberate Project MONITORING AND CONTROL or PMC Identification
- DSM500: Final Project Report, Coursework 2, UOL, Singapore
- DSM080: Financial Markets, Assignment, UOL, Singapore: A grapefruit juice futures contract is for 15,000 pounds of frozen grapefruit juice
- DSM080: Financial Markets, Assignment, UOL, Singapore: The share price of a certain stock today is $42.50, and five-month European style call options with a strike price of $45 currently sell for $4.25.
- DSM080: Financial Markets, Assignment, UOL, Singapore: A trader who is working in the gold markets is able to borrow money at the interest rate of 7% per annum
- DSM080 Financial Markets, Assignment, UOL, Singapore: A dollar-based American corporation has decided that it will have to pay 6 million UK pounds in three months
- Principle of Finance Assignment, UCD, Singapore: National Gaming Inc. (National) operates the weekly lottery in the country
UP TO 15 % DISCOUNT