Problem
Question I
An investor is holding many Commonwealths Bank Limited shares in an investment portfolio and wishes to protect the value of the investment. The commonwealth Bank Limited shares currently trade at $90.50. The investor buys a put option with an exercise price of $240.00 per share and a premium of $1.50 per share.
i. What is a put option and what is a call option?
ii. Explain the premium and the exercise price.
Question II
List Foreign exchange market participants, briefly explain the roles of any three participants.