Individual Assignment 1 (25%) o Submit your assignment electronically via the Turnitin Assignment tool by Monday 14th September. The link for the Turnitin Assignment tool has been created for you...

Individual Assignment 1 (25%) o Submit your assignment electronically via the Turnitin Assignment tool by Monday 14th September. The link for the Turnitin Assignment tool has been created for you under the Assignment page on MyUni. You will need to upload a Word version of your assignment to Turnitin. o ONLY e-submissions will be accepted. For guidance on how to submit your assignment electronically via MyUni, please visit http://www.adelaide.edu.au/myuni/tutorials and click on the “Submit an Assignment 1” tutorial. o Use ONLY the data file provided on MyUni under the ‘Assignment’ module. Please select one stock and its PUT options to perform this assignment. o You are encouraged to use Eikon to research into the selected stock and its options. Eikon instructions are provided on MyUni. You may use other data sources if you prefer. 1. Assume you have AUD 100,000 that you must invest in a stock on 2nd January 2020. Select a stock from the data provided to invest. Justify your selection. (5 points) Data: daily stock price, beta and some fundamental indicators (EPS, DPS, D/E Ratio) Assessment criteria: o Basis and reasons for selecting the stock based on fundamental analyses. Qualitative analyses will be considered provided the arguments are rigorous and convincing. o Full details of investment in a table format with appropriate narrative of all relevant transactions that may occur in real world investment. 2. Develop a delta neutral strategy for the period 03/08/2020 to 20/08/2020 to hedge against short term volatility. Explain how the strategy will work, and detail all transactions for undertaking the strategy. You are required to perform at least one re-balancing. (11 points)Data: daily stock and option prices Assessment criteria: o Clearly stated hedging objective(s), determined in light of prevailing market conditions o Clear explanation of why and how the strategy will contribute to your objective o Correct implementation of delta hedge o Correct implementation of at least one rebalancing transaction o Full details of transactions captured in a table with appropriate narrative of all relevant transactions that may occur in real world investment 3. At the end of the period, close all the positions and evaluate the effectiveness of your strategy. (6 points)Assessment criteria: o Correct liquidation of positions and calculations of profit/loss o Effectiveness of the hedge and reasons why the hedge strategy worked/failed to work as you expect o Discuss how the hedge can be improved taking into account the shortcomings you identified above REPORT WRITING. Your report must document a complete discussion of the process outlined above, including full details of transactions executed. Transaction costs must bear evidence that it is a realistic figure. Good structure, presentation and concise writing skills are likewise important. Your report length can be a MAXIMUM of 5 pages (size 12 font, 1.5 spacing), including all discussion, graphs, tables and references. (3 marks)