Asif is a fund manager with a share portfolio currently valued at $1 billion under management. He
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Asif is a fund manager with a share portfolio currently valued at $1 billion under management. He considers that the share market is much over-priced and fears a sharp downturn of 20% in the market by June 2022, which will badly affect his share portfolio’s value and performance, which he wishes to protect. He seeks your advice as to whether he should take a short position in futures or buy a put option, each with an exercise price of $1 billion (the current value of his share portfolio).
Explain each of the two strategies, and state your recommendation which Asif should follow, with reasons.
Related Book For
Statistics for Business and Economics
ISBN: 978-0132930192
8th edition
Authors: Paul Newbold, William Carlson, Betty Thorne
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