Skip to Main Content
Derivatives and Risk Management, 1st Edition
book

Derivatives and Risk Management, 1st Edition

by Sundaram Janakiramanan
May 2024
Intermediate to advanced content levelIntermediate to advanced
542 pages
27h 26m
English
Pearson India
Content preview from Derivatives and Risk Management, 1st Edition
136 Derivatives and Risk Management
(i) Explain how you would speculate using a futures contract.
(ii) If the market price of Kingsher Airlines is INR 45.45 and the April futures price is INR 46.25 on April 19, what
would be your speculative gain?
Solution to Problem 7.8
(i) Since you expect the price to decrease, speculation involves:
(a) Taking a short position in Kingsher Airlines futures on April 15 at INR 47.75; and
(b) Closing your short position on April 19 by entering into a long Kingsher Airlines futures contract at the
prevailing futures price.
(ii) Speculative gain = (Price at the time of opening the position – Price at the time of closing the position)
× Contract size × Number of contracts
erefore,
Gain = (47.75 ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Derivatives and Risk Management

Derivatives and Risk Management

Madhumathi Madhumathi, Ranganatham Ranganatham
Derivatives and Risk Management

Derivatives and Risk Management

Sundaram Janakiramanan

Publisher Resources

ISBN: 9781299447547Publisher Website