wardegul co question 4 -sep/dec 2017

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March 13, 2018 at 1:24 pm #442450
jessiewong899
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sir, when do the interest rate for option in future ,it is have to do the both strike price in exam? if I only get one of the strike price in exam, for eg, I only use 95.25 to get APR of 4.9% and 4.01%, will I give full marks Iin exam on this?
March 13, 2018 at 3:20 pm #442472
John Moffat
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Ideally you would show the calculations for both strike prices.
However, most of the marks are for proving that you know how options work, and so if you are short of time you would get most of the marks by just showing it for one of the strike prices (and writing that there is another one available).
March 13, 2018 at 3:24 pm #442473
jessiewong899
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sir, then does it means I can choose 95.25 as strike price by stating that is the best price in worst scenario case and get full mark on the calculation for option in future in exam?
March 13, 2018 at 5:32 pm #442487
John Moffat
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To get full marks you would have to look at both exercise prices but you would get most of the marks by just looking at one. (It may be best in the worst case, but it would be worst in the best case because the premium (which would be payable anyway) would be higher.
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