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QUESTION 1 (20 MARKS) a. Today, June 2020 the downward in the market has attract the traders to grab the opportunity to enter the futures market. The expert in the market assumed that the economy will slowly rise in three months later. Therefore, Alex as a dealer in his company try to protect his client portfolios in crude palm oil industry. He enters the market today for the contract between July and September. His client has 10 lots of CPO futures. As in June 2020, June CPO futures is RM1220, July CPO futures is RM1270, August CPO futures is RM1310 and September CPO futures is RM1345. While in July, the CPO futures price as spot month is RM1305, next month is RM1327 and the next one month is RM1364. Malaysia Delivery Clearing House (MDCH) currently is charging the cost of storage at RM10 per month and the interest rate for borrower is 5.5%. Required: i) Alex may enter as a hedger, speculator, spreader or arbitrageur in the futures market. What is the best strategy to be taken for Alex to protect his client portfolio? If Alex enter all the above strategies, what would be the advantage(s) or disadvantage(s) from each of the strategy? Explain. (10 marks) ii) If Alex choose spreading as the best strategy, compute the spreading benefits from the above transaction. Assume if there is a commission charge of RM100 per round. (7 marks) b) What means of "futures"? Give different examples to support your argument. (7 marks)