Stock Market Futures Market January KLSE composite index stands at 1162. Investor expects to purchase a RM10million stock portfolio in two months’ time Buys March KLSE CI contracts at 1158 March KLSE composite index has risen to 1171, making the acquisition costs of the shares more expensive. Sells March KLSE CI contracts at 1173 b. Assume that the investor wants to cover the full value of their expected investment. How many March KLSE CI futures contracts must they purchase? c. Calculate the profit/loss on the spot transaction. d. Calculate the profit/loss on the futures transaction.
Stock Market Futures Market January KLSE composite index stands at 1162. Investor expects to purchase a RM10million stock portfolio in two months’ time Buys March KLSE CI contracts at 1158 March KLSE composite index has risen to 1171, making the acquisition costs of the shares more expensive. Sells March KLSE CI contracts at 1173 b. Assume that the investor wants to cover the full value of their expected investment. How many March KLSE CI futures contracts must they purchase? c. Calculate the profit/loss on the spot transaction. d. Calculate the profit/loss on the futures transaction.
Chapter31: Capital Markets
Section: Chapter Questions
Problem 2E
Related questions
Question
|
Stock Market |
Futures Market |
January |
KLSE composite index stands at 1162. Investor expects to purchase a RM10million stock portfolio in two months’ time |
Buys March KLSE CI contracts at 1158 |
March |
KLSE composite index has risen to 1171, making the acquisition costs of the shares more expensive. |
Sells March KLSE CI contracts at 1173 |
b. Assume that the investor wants to cover the full value of their expected investment. How many March KLSE CI futures contracts must they purchase?
c. Calculate the
d. Calculate the profit/loss on the futures transaction.
e. Is the hedging strategy efficient?
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