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Description The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. Assignments submitted through email will not be

October 18, 2024

Description

The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented; marks may be reduced for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.

Assignment Questions: (Marks- 10)

Answer all the following Questions:

Identify and briefly discuss the various types of option transaction costs? (250-300 words) 2.5 Marks
Explain why an option’s time value is greatest when the stock price is near the exercise price and why it nearly disappears when the option is deep- in -or out- of -the money. (250-300 words) 2.5 Marks
ABC Company stock currently priced at $ 80. One period later it can go up by 25% or go down by 20%. The risk-free rate is 7 percent. Calculate the current /theoretical value of the European call option if the exercise/strike price is SAR 80? (5 Marks)

Answers:

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment-1
FIN 405 – Financial Derivatives
Due Date: 28/09/2024 (End of Week-6) @ 23:59
Course Name: Financial Derivatives
Student’s Name:
Course Code: FIN 405
Student’s ID Number:
Semester: First
CRN:
Academic Year: 2024-2025
For Instructor’s Use only
Instructor’s Name: Dr Jyoti Agarwal
Students’ Grade: Marks Obtained / Out of 10 Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
•
•
•
•
•
•
•
•
The Assignment must be submitted on Blackboard (WORD format only) via
allocated folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented; marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students
or other resources without proper referencing will result in ZERO marks. No
exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced)
font. No pictures containing text will be accepted and will be considered
plagiarism).
Submissions without this cover page will NOT be accepted.
Assignment Questions: (Marks- 10)
Answer all the following Questions:
1. Identify and briefly discuss the various types of option transaction
costs? (250-300 words)
2.5 Marks
2. Explain why an option’s time value is greatest when the stock price is
near the exercise price and why it nearly disappears when the option is
deep- in -or out- of -the money. (250-300 words)
2.5 Marks
3. ABC Company stock currently priced at $ 80. One period later it can
go up by 25% or go down by 20%. The risk-free rate is 7 percent.
Calculate the current /theoretical value of the European call option if
the exercise/strike price is SAR 80?
(5 Marks)
Answers:
1
2
3

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Description The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. Assignments submitted through email will not be

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