Hamish Is a Day Trader Who Forms the Opinion That

question 15

Essay

Hamish is a day trader who forms the opinion that JB Hi Fi will fall from its current price of $18.50 to $18.He has $5000 to risk.The initial margin payment is 10%, ignoring brokerage costs.(a)What CFD order should Hamish place and what exposure does this achieve?
(b)Later that day, JB Hi Fi shares are trading at $18.Explain how Hamish can close-out his position and the profit or loss achieved.(c)Say instead the price increased to $19.Again explain how Hamish can close-out his position and the profit or loss achieved.

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Definitions:

Polypeptides

Chains of amino acids that form the building blocks of proteins, critical for various biological functions within organisms.

Microspheres

Tiny spherical particles, often of microscopic size, used in various applications from drug delivery systems to cosmetics, consisting of a polymer shell enclosing a vacuum or a solid substance.

Amphibians

Members of the vertebrate class that includes salamanders, frogs, and caecilians.

Ancestral Organisms

Early forms of life from which current species have descended, often studied to understand evolutionary relationships.