Posted: October 5th, 2022

FINA5520: Group Assignment (

FINA5520: Group Assignment (20%)
September 10, 2022
Directions:
ˆ Submission deadline: 14 October 2021 (by 4pm Perth time)
ˆ Please learn the course professionalle about late submission; it says A penalty of 5 per cent of the whole mark
allotted for the Assessment merchandise is deducted per day for the rst 7 days (together with weekends and public
holidays) after which the project just isn’t accepted. Every 24-hour block is recorded from the time
the project is due. For instance, if an project is late by three days and was given 45 out of a
attainable mark of 50, you’ll obtain a mark of 37.5 out of 50 (a mark of two.5 is deducted per day).
ˆ This can be a group project, consisting of three questions. Every group has three college students.
ˆ Submit just one report and one Excel le per group through LMS > Assessments > Assignment (20%).
ˆ Questions 1 and a pair of may be solved utilizing the data gained from lectures four, 5 and seven. Question Assignment three can
be solved utilizing the data gained from lecture eight (and a few from lectures 9 and 10).
ˆ The submitted report should be in pdf format. The report and Excel le should be named in response to
your group numbering (e.g., Group01.pdf and Group01.xlsx for group 1). Click on this hyperlink to establish
your group numbering.
ˆ Reply Questions 1 and a pair of within the pdf report, and Question Assignment three in Excel.
ˆ All submissions might be cross-checked utilizing Turnitin for potential plagiarism.
ˆ This project has 25 factors, however might be marked as 20%. Nonetheless, you need to verify for grammar,
spelling, typos and so forth. That’s, be sure your report is presentable. In case your report has extreme grammatical errors, typos and so forth (i.e., not presentable), then a most 5-point-penalty might be imposed.
ˆ All college students in every group might be given the identical mark, topic to SPARK analysis. If SPARK
analysis reveals in any other case, I’ll conduct separate interviews with every of the group members. If the
allegation is confirmed, the coed in focus can have his/her particular person mark scaled down accordingly.
Causes reminiscent of I haven’t got time to contribute to my group due to my on-going internship or I
do not know methods to Help my group aren’t acceptable.
ˆ Everybody should have a bunch by September 18, 2022. If you do not have a bunch by then, your particular person
mark might be deducted accordingly. Therefore, it’s your accountability to tell me previous to September
18, 2022 if you do not have a bunch by then, in order that I can assign you with one.
1
1 Fairness choices (5%)
The target of this Question Assignment is to be taught studying, and using, fairness choices info obtained from
Eikon. Earlier than starting, I counsel you to observe the Eikon Possibility Pricer App coaching video (https:
//coaching.refinitiv.com/videoplayer/playlist/503/23097) to familiarize your self with utilizing Eikon.
Then, entry Eikon, and within the search command (positioned on the prime left hand nook of the display), enter
AAPL choice and use these settings:
ˆ Trade: OPRA
ˆ Expiry: Dec 16, 2022
ˆ Strike: All
ˆ AAPL spot closing share value is proven on the prime of the display.
ˆ Details about name and put choices are proven on the primary display. Within the final column, the c
character in (say) 125.75c means the (newest) closing choice value. Use the numbers proven within the final
column in your dialogue beneath.
Required: Apple Inc. (ticker: AAPL) launched the brand new Iphone 14 on September eight, 2022. You imagine that
the brand new product will end in AAPL share value to rise above the present value by (at the least) 10% in mid
December 2022. Given the details about name and put choices proven on the display, which choices would
you employ to generate profits from an accurate prediction? Within the report, present the Eikon screenshot, and:
1. focus on whether or not you’ll take an extended or a brief choice place,
2. focus on whether or not you’ll use a name or a put,
three. specify the choice strike value that you’ll use, and most significantly,
four. focus on why you select the decision/put choice of your selection, and why you did not select different choices.
Notice: There is no such thing as a denite reply to this Question Assignment. It’s a matter of inspecting the choices obtainable within the
market, and rationally contemplating which may be applicable, and inappropriate. Thus, marks are awarded
based mostly on the way you justify your choose, and why you did not select different choices. Restrict your dialogue to no
greater than 5-6 sentences, and write them in level kind (not in a paragraph).
2
2 Choices buying and selling methods (10%)
The target of this Question Assignment is to assemble fundamental choice buying and selling methods utilizing Eikon. Earlier than starting,
I counsel you to observe the Eikon Possibility Pricer App coaching video (https://coaching.refinitiv.com/
videoplayer/playlist/503/23097) to familiarize your self with utilizing Eikon. Then, entry Eikon, and in
the search command (positioned on the prime left hand nook of the display), enter AAPL Possibility Pricer, and
use these settings:
ˆ Underlying inventory: AAPL (Apple Inc)
ˆ Commerce date: Sep 08, 2022
ˆ Leg sort: Vanilla
ˆ Deal sort (promote or purchase): It is determined by the choice technique required beneath
ˆ Ccy/unit: USD / 100 shares
ˆ Possibility type: European
ˆ Possibility sort (name or put): It is determined by the choice technique required beneath
ˆ Calculate: Black Scholes
ˆ Underlying value: Final
ˆ Expiry: Dec 16, 2022
ˆ Moneyness: It is determined by the choice technique required beneath
You’re required to assemble the next two unbiased methods (see CME_brochure.pdf for guidance):
1. Bear unfold, with the rst strike value is $20 beneath AAPL final share value (which is noticed on commerce
date; see setting above), and the second strike value is $20 above AAPL final share value
2. Lengthy strangle, which consists of 105 moneyness for each name and put choices
Required: For every technique, present the Eikon screenshot of terminal professionalt diagram (activate Present scenario in Eikon). You may need to regulate Vary Min and Vary Max when plotting the diagram. Then
clarify (in your individual phrases and in not more than four sentences) why the technique is constructed. Write your
clarification in level kind (not in a paragraph).
three
three Monte-Carlo simulations (10%)
You need to use the Monte-Carlo simulation method to cost all of the derivatives on this Question Assignment. Use solely
Excel and do NOT use macros, VBA, VBE, or any programming languages. Submit the Excel le. Marks
are awarded provided that your solutions may be mechanically up to date once I push the F9 button.
A inventory is at the moment priced at $10. The dynamics of the inventory value are modelled utilizing the acquainted specication
of:
St+∆ = St exp h

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