Q4. value the UC investment. So, job #1 -- plot the payoff of this investment! The two main features...

Question

Q4. value the UC investment. So, job #1 -- plot the payoff of this investment! The two main features are the guaranteed return of 11.25%, and the 5% performance fee above that.

Hints: I would assume I invest $1,000,000, or $100, or some nice number like that. I would also plot the payoff for 1 year only. For simplicity, I will assume that I will be able to withdraw the investment in full.

Q5. replicate the payoff using the regular shares available to the retail investors, and some options.

Q6. If you know the premiums of the options, can you compute the implied price of the shares?

Use excel anwser questions, also with short writing explaining.

reading-uc-investment-ujqepl50.pdf

Komalavalli · Accepted Answer

Q4
		SD 	12.24%	0.0102			1000
			Premium	Strike price	LTP	Payoff
		2/23/23	10	15	5
		3/31/23	10.102		3.2	1.8	360
		4/27/23	10.2050404		3.7	1.3	260
		5/25/23	10.3091318121		3	2	400
		6/29/23	10.4142849566		2.95	2.05	410
		7/27/23	10.5205106631		2.8	2.2	440
		8/31/23	10.6278198719		2.3	2.7	540
		9/28/23	10.7362236346		2.4	2.6	520
		10/26/23	10.8457331156		1	4	800
		11/30/23	10.9563595934		0.9	4.1	820
		12/29/23	11.0681144613		1	4	800
		1/25/24	11.1810092288		-0.5	5.5	1100
						profit	10%
		In this UC fund2050 I have invested $1000 , Let us assume the option is currently trading at $10 
		my strike price is 15 Last traded price is 5 .So 1000/5 gives me 200 leg,

Q4. value the UC investment. So, job #1 -- plot the payoff of this investment! The two main features are the guaranteed return of 11.25%, and the 5% performance fee above that.Hints: I would assume I...

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