Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / FINC 340: INVESTMENTS UNIT #5 WEEKLY WRITTEN ASSIGNMENT DIRECTIONS: Here is the Unit #5 Weekly Writing Assignment that you should submit to your Unit #5 Homework Assignment Folder

FINC 340: INVESTMENTS UNIT #5 WEEKLY WRITTEN ASSIGNMENT DIRECTIONS: Here is the Unit #5 Weekly Writing Assignment that you should submit to your Unit #5 Homework Assignment Folder

Finance

FINC 340: INVESTMENTS

UNIT #5 WEEKLY WRITTEN ASSIGNMENT

DIRECTIONS: Here is the Unit #5 Weekly Writing Assignment that you should submit to
your Unit #5 Homework Assignment Folder.
Please submit your Unit #5 Writing Assignment in MS Word format with the following file
name: LastNameFirstInitial_Unit 05_Writing Assignment.docx. For example, if you name
is John Smith, the file name should be SmithJ_Unit05_Writing Assignment.docx.
If you have any questions or comments, please do not hesitate to contact me.

NAME: _____________________________________
Evan Williamson is sharing his ideas about investing with you. Evan believes that the
markets are riggged, complex, and no one truly understands tham. From 2000 to 2002 , he
lost a lot of money but made some of it back a few years later. From 2006 to 2008, he lost
money again and decided to stop investing for a period of time. He just couldn’t toelrate
the ups and downs of the market. Evan is now invested in stocks but is still fustrated
because he missed most of the bull market. Additionally, he thinks stocks may be priced
too high and interested rates may be too low. Clearly, the “buy and hold” strategy is not
working for Evan.
After listening to Evan, you suggest that depending on Evan’s risk tolerance, he might
consider broadening his investment horizons by adding options to his portfolio. If Evan
has a stock or ETF that he wants to protect for a certain amount of time, options can be one
way to achieve that. For example, Evan may have a position that he wants to sell, but
doesn't want to liquidate in the current calendar year for tax reasons. Selling it next year
would be better for Evan but he is afraid of the stock losing value.
1. You decide to demonstrate to Evan how diversifying with options can assist him in
broadening his investment horizons. Complete the following table by stating if the
investor should buy or sell puts or calls to match the investor’s objectives:

Option Strategy Review

If the Investor is: They Should:

Bullish
Bearish
Long stock wants protection
Long stock wants income

Short stock and wants protection
Expecting volatility
Expecting stability
Mildly bullish wants limited risk, limited gain
Mildly bearish, wants limtied risk, limited gain
2. In your next discussion with Evan you describing the benefits of options by
explaining how options allow investors to take long or short positions on the
underlying assets without actually acquiring them.
3. Recently, someone mentioned currency and interest rate options to Evan. Evan
wants you to explain how stock, currency and interst rate options can establish
hedge positions that reduce the risk of loss from price flucuations.

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE