On 6 January 2002,the All Ordinaries Index Closed at 3435

question 58

Multiple Choice

On 6 January 2002,the All Ordinaries Index closed at 3435 points and the June 2002 SPI 200 futures was priced at 3457 points.A speculator believes that share prices are likely to fall and so decides to sell June 2002 SPI 200 futures.One week later,when the All Ordinaries Index falls to 3417 points and the June 2002 SPI 200 futures falls to 3436 points,the speculator decides to reverse her position.How much profit/loss does the speculator make?

• A)$450 gain.
• B)$475 gain.
• C)$525 gain.
• D)$525 loss.

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Definitions:

Stock's Beta

A rephrased definition for Beta Coefficient; it measures a stock's volatility in relation to the overall market, indicating the risk associated with the stock's returns.

Well-diversified Portfolio

An investment collection that includes a wide range of asset classes in order to minimize risks and maximize returns.

Coefficient of Variation

A measure of relative variability that indicates the ratio of the standard deviation to the mean.

Standard Deviation

A statistical measure that represents the dispersion or variability around the mean of a dataset, commonly used to quantify the risk of an investment.