Download JNTUA MBA 2019 June 4th Sem 14E00403 Financial Derivatives Question Paper

Download JNTUA (JNTU Anantapur) MBA (Master of Business Administration) 2019 June Supplementary 4th Sem 14E00403 Financial Derivatives Previous Question Paper

Code: 14E00403

MBA IV Semester Supplementary Examinations May 2019
FINANCIAL DERIVATIVES
(For students admitted in 2014 (LC), 2015 & 2016 only)

Time: 3 hours Max. Marks: 60

All questions carry equal marks
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SECTION ? A
(Answer the following: 05 X 10 = 50 Marks)

1 What do you mean by derivatives? Discuss types and role of derivatives.
OR
2 Discuss the nature of Financial and Derivative markets also explain uses and misuses of derivatives.

3 Explain the features of a future contract and also discuss under what circumstances does a minimum
variance hedge portfolio lead to no hedging at all.
OR
4 ?If there is no basis risk, the optional hedge ratio is always 1.0?. Is this statement is true? Explain your
answer.

5 What is meant by a protective put? What position in call option is equivalent to a protective put?
OR
6 A call option with a strike price of Rs. 500 costs Rs. 20. A put option with a strike price of Rs. 450 costs
Rs. 30. Explain how a strangle can be created from these two options. What is the pattern of profits
from the strangle?

7 Distinguish between the following:
(i) Put option and Call option.
(ii) American option and European option.
(iii) Standard option and Exotic option.
OR
8 What is the lower bound for the price of a three-moth European call option on a dividend-paying stock
when the stock price is Rs. 710, the strike price is Rs. 650, the expected dividend in two months is
Rs. 5 and the risk-free interest rate is 10% per annum?

9 What are different types of SWAPs? Explain in detail.
OR
10 Briefly explain the nature, growth and features of SWAPs.

SECTION ? B
(Compulsory Question, 01 X 10 = 10 Marks)
11 Case study:
On the basis of following information find the value of a European call option.
Rs. 92
Rs. 95
T 50 days or 50/365 = 0.137 days of a year
r 7.12%
35%
Assume that the stock does not pay dividends.
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