This is designed to test students on designed to test students on Topic 7 (Mechanics of option markets) and on Topic 8 (Trading strategies involving...

This is designed to test students on designed to test students on Topic 7 (Mechanics of option markets) and on Topic 8 (Trading strategies involving options). Students are expected to research on the Chinese financial system. The emphasis is on analytical thinking to assess the effectiveness and implications of hedging strategies.

Question

A.      Discuss the factors behind the severe China stock market decline from 12 June 2015to 26 August 2015. [5 marks]  About 500 wards

B.     Describe the hedging techniques, and evaluate their effectiveness, that portfoliomanagers can use to hedge the stock market decline in part a. [15 marks] about 1200 wards.

C.     Discuss the impact of the Chinese Yuan’s inclusion in IMF’s basket of currencies (on 30 November 2015) on the longer term risk management approach of Chinese firms.[10 marks] about   900 wards

Note: Word count requirement is 2,500 words. There must be a minimum of 10 references.