part c please

BEN3144 FINANCIAL DERIVATIVES 21 OCTOBER 2012 Answer all questions in the answer booklet provided. QUESTION 1 (25 MARKS) (a) Options are derivative securities which are widely used for hedging, speculating and arbitraging. Discuss four advantages of using options. (8 marks) (b) Discuss which party-buyer or seller should pay margin in trading option. (4 marks) (c) Read the information on table below and answer the following questions. Products - FTSE Bursa Malaysia KLCI Futures FTSE Bursa Malaysia KLCI Mini FTSE Bursa Malaysia Mid 70 Index Futures Crude Palm Oil Futures Options on Crude Palm Oil Futures SC Options SY Mth Mth- Month Mth- End Mth Volume OpenVolume Interest End Open Interest Mth Volume Mth End Open interest Mth. Mth End Mtht: Volume 1 OpenVolume Interest Mth End Open Interest Jan/19 181,961 1,390 296 327 Feb/19 1 70088 20,620 13,451520 141.892 178.688 188,973 Marl19 1,169 837 21,402 28.419 20.897 22.749 20,820 33,451 25,406 34.937 26.1741 27.812 19,983 24,961 336 514671,019 188,800 2,800 10,900 505 582,039 211.630 2.300 9,300 280943,784 246,407 1,650 6,050 767 864,153 232.810 3.300 6.250 427 804,623 222.235 2.9506.200 537727134220.9751.100 4,950 Apr 1,709 May/190 212,272 Jun/19 166,067 1,510 1.217 (i) Provide your comment on the selected derivatives instruments above based on the volume and open interest. (5 marks) (ii) Explain volume and open interest. What do these two indicators describe? (5 marks) (iii) Are these instruments over-the counter (OTC) or exchange-traded product? (3 marks) BEN3144 FINANCIAL DERIVATIVES 21 OCTOBER 2012 Answer all questions in the answer booklet provided. QUESTION 1 (25 MARKS) (a) Options are derivative securities which are widely used for hedging, speculating and arbitraging. Discuss four advantages of using options. (8 marks) (b) Discuss which party-buyer or seller should pay margin in trading option. (4 marks) (c) Read the information on table below and answer the following questions. Products - FTSE Bursa Malaysia KLCI Futures FTSE Bursa Malaysia KLCI Mini FTSE Bursa Malaysia Mid 70 Index Futures Crude Palm Oil Futures Options on Crude Palm Oil Futures SC Options SY Mth Mth- Month Mth- End Mth Volume OpenVolume Interest End Open Interest Mth Volume Mth End Open interest Mth. Mth End Mtht: Volume 1 OpenVolume Interest Mth End Open Interest Jan/19 181,961 1,390 296 327 Feb/19 1 70088 20,620 13,451520 141.892 178.688 188,973 Marl19 1,169 837 21,402 28.419 20.897 22.749 20,820 33,451 25,406 34.937 26.1741 27.812 19,983 24,961 336 514671,019 188,800 2,800 10,900 505 582,039 211.630 2.300 9,300 280943,784 246,407 1,650 6,050 767 864,153 232.810 3.300 6.250 427 804,623 222.235 2.9506.200 537727134220.9751.100 4,950 Apr 1,709 May/190 212,272 Jun/19 166,067 1,510 1.217 (i) Provide your comment on the selected derivatives instruments above based on the volume and open interest. (5 marks) (ii) Explain volume and open interest. What do these two indicators describe? (5 marks) (iii) Are these instruments over-the counter (OTC) or exchange-traded product