2. An investor buys a call option of Syarikat TNT at an exercise price of RM6.00,...
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2. An investor buys a call option of Syarikat TNT at an exercise price of RM6.00, premium RM0.50 with a current market price of RM8.00 per share. (a) What is the investor's rational for entering into the strategy? If the current market price goes up to RM10.00, what is the profit/loss pay off for the investor? (b) (c) If the current market price declines to RM5.00, what is the profit/loss pay off for the investor? (d) Show the investor's break- even point. Consider KLCI 660 Call Option @20 has the following prices: (LONG CALL) Day 1 : 670 2: 665 3: 672 4 675 5: 685 Show your pay-off profile. What happen if you decide to exercise on day 5? 2. An investor buys a call option of Syarikat TNT at an exercise price of RM6.00, premium RM0.50 with a current market price of RM8.00 per share. (a) What is the investor's rational for entering into the strategy? If the current market price goes up to RM10.00, what is the profit/loss pay off for the investor? (b) (c) If the current market price declines to RM5.00, what is the profit/loss pay off for the investor? (d) Show the investor's break- even point. Consider KLCI 660 Call Option @20 has the following prices: (LONG CALL) Day 1 : 670 2: 665 3: 672 4 675 5: 685 Show your pay-off profile. What happen if you decide to exercise on day 5?
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