Rift Valley University Jimma Campus Group Assignment for the Course Management of Financial institutions. Target Group Business Management Group 1 and 2 Regular third year.2013 E.C Submission date on ,March 26/2021 maximum Weight; 30% 1, Suppose that on August 16, 2013, the treasurer of an Ethio-corporation knows that the corporation will pay USD 1 million in six months (on February 16, 2014) for their foreign client and thus the treasurer agreed with CBE to buy USD 1 million six months forward at an exchange rate of birr 10.4359. If at the end of the six month (i.e., on Feb 16, 2014) the spot exchange rate (a) rise to 10.5000, (b) fell to 10.4000, C, what would be the gain/loss for Ethio-corporation and CBE? 2, suppose investor SAMI has purchased a call option on IBM stock with an exercise price of Br. 125 and investor KASA has purchased a put option on SONY stock with an exercise price of Br. 60. A, When will Call options be ITM, OTM & ATM? B, When will Put options be ITM, OTM & ATM? 3, Suppose that the current share price of ABC’s share is Birr 150. Mr. Abebe, the holder of ABC’s share, expects that a price in a 3 month period will go down. To reduce the chance of risk on price decrease and at the same time to have an opportunity of making profit Mr. Abebe purchases a 3 month put option on ABC’s share at an agreed exercise price of Birr 150 from Mr Elias. Assume the premium of Birr 5. A. Compute the net payoff for Mr. Abebe and Mr Elias if the share price at maturity for ABC’s share was Birr 130, Birr 140, Birr 145, Birr 150, Birr 160, Birr 165, and Birr 170. B, Show graphically the net payoff computed under ‘A’ for both Mr. Abebe and Mr. Elias for given share price of Birr 130, Birr 140, Birr 145, Birr 150, Birr 160, Birr 165, and Birr 170. 4, write the role of financial institutions. 5, write types of financial institutions with examples. 6, ______________________is the length of time until final payment. 7, ______________________ is any possession that has value in any exchange. GOOD LUCK!!!
