You are bullish on the prospects of ABC share price rising. There are two speculative strategies that you are considering.

• Under the first strategy, you would purchase 100 ABC shares at the spot price of $6.8.
• Under the second strategy, you would enter long European call options covering 1,000 ABC shares. The option has a strike price of $14.6 and can be purchased for a premium of $0.68 per share.

How high must ABC share price rise for the second strategy to become at least as profitable as the first? That is, at what share price do the two strategies provide the same profit?

Enter your answer to 2 decimal places.

The price of a stock is $35.6. A call option on this stock has a strike price of $35 and is quoted at $1.6.

You enter a short position in this European call option.  One option contracts covers 100 underlying shares. 

The call option is exercised when the stock price is $37.4. Calculate your total net loss:

The price of a stock on July 1 is $90. A trader enters a long call option on this stock with a strike price of $95.

The quoted option price is $4. One option contract covers 100 shares.

If the call option is exercised when the stock price is $108, what is the trader’s net profit is:

Commonwealth Bank (CBA) shares are currently trading at $75. Two months from now, CBA will pay a dividend of $2.9 per share. If the riskless interest rate is 8% pa, what is the fair forward price ("F") for delivery of CBA shares in 7 months time?

Enter your answer to 2 decimal places. Do not enter the dollar sign "$".

CSL shares are currently trading at $290. Assume that CSL pays no dividends. The riskfree rate is 9% pa.,

Calculate the fair forward price ("F") for delivery of CSL shares in 14 months time?

Enter an answer to 2 decimal places. Do not enter the dollar sign "$".

The spot exchange rate between Australia and New Zealand is AUD 1.00 = NZD 1.36. Interest rates in Australia and New Zealand are 4% and 7% per annum respectively.

Calculate the fair forward price for delivery of one NZD in 6 months time.

Your answer will be expressed in terms of AUD. Give an answer to 4 decimal places.

The spot price of West Texas Intermediate (WTI) oil is $43 per barrel.

The fair forward price for delivery of WTI Oil 3 months from now is $45. However, you notice that WTI Oil forward contracts with delivery in 3 months are quoted at $48 per barrel.

What trades are required now to capture this arbitrage opportunity?

$402 is invested for a period of 7 years with continuously-compounded interest of 7% per annum. How much will it grow to?

Enter your answer to 2 decimal places. Do not enter the dollar sign "$".

You will receive $181 in 3 years time. If the discount rate is 4% per annum continuously compounded, what is the present value of this future cashflow?

Enter your answer with 2 decimal places. Do not enter the dollar sign "$".

You manage an equity portfolio currently worth $83m. The beta of this portfolio is 1.42. If the SPI200 futures contract is quoted at F=5672, how many short SPI200 contracts are required to fully hedge this equity portfolio?

Round your answer to the nearest whole number.