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:

Successful Mergers

The combining of two or more companies in a way that results in increased value generation, efficiency gains, and enhanced competitiveness in the market.

Rapid Growth

This denotes a phase where a company or economy experiences an above-average increase in revenue, production, or other significant measures over a short time.

Acquisitions

The process of obtaining control of another corporation by purchasing or exchanging equity interests or assets.

Horizontal Merger

A horizontal merger is a business consolidation that occurs between firms operating in the same industry or producing similar products, aimed at increasing market share.