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!
- Business Accounting & Finance – (VM) – A3 Assignment, UOM, Singapore
- HRM3010S: Managing People At Work, Assignment, UCD, Singapore
- HFS351: Safety Management and Audit, End-of-Course Assessment, SUSS, Singapore
- HFSY217: Emergency Preparedness and Response Planning, TMA (Tutor-Marked Assignment), SUSS
- CMM315: TMA (Tutor-Marked Assignment) – Peacebuilding and Security, SUSS, Singapore
- Harley Davidson utilized different entry mode strategies in pursuit of internationalization: Sustainable, Assignment, UoN, Singapore
- Nursing Patients With Chronic Illness, Assignment 3, LTU, Singapore: Jason Bundhoo is a 42-year-old car driver from Triolet
- DSM: R for Data Science, Coursework 2, UOL, Singapore: In this coursework assignment you should return to this dataset and perform an appropriate investigation into building a statistical model
- DSM120: Financial Data Modelling, Coursework 1, UOL, Singapore
- Data Science Final Project, Coursework 1, UOL, Singapore: Your first formal coursework submission is your full project proposal, This sets out very clearly what your Data Science Project will be, and also how you will conduct the project
UP TO 15 % DISCOUNT