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Please explain :
1. why the answer does not take into account of 96 option calculation (only take into account of 95.5 option).
2.When not exercise the option, it is not always necessary to calculate loss on option ?
3.Regarding to mention of buy/sell put/call option, can I just say “buy put option” or I must explain ” Keshi needs to hedge against a rise in interest rate, hence it needs to buy put option”.
Thank you
1 The answer shows the calculations for both exercise prices.
2 If the option is not exercised then there is no loss on the option (but the premium is of course still paid).
3 Yes you can. There is no need to explain why.
1. Actually, the answer in Revision Kit has not show the calculation of 96 option. I must show this calculation in the exam to gain full mark ?
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