Question: a) What was the cumulative return for BCE Inc stock (traded over the Toronto Stock Exchange) from the beginning of 2016 to the end of 2016? Plot the BCE stock price for this time period. Also find the prices of the BCE call and put options maturing in January 2018 with exercise prices closest to BCE's current stock price. Explain why an investor would invest into each of these three securities.
b) What were the cumulative returns on the following indices: S&P/TSX, Nikkei 225, FTSE 100 and DAX from the beginning of 2016 to the end of 2016? Plot the index levels for this time period. How are these indices calculated? Identify the index that had the highest performance over this period and provide a brief explanation of why this happened based on any news and/or research.
c) Assuming you have $100,000 available to invest, how would you allocate this money among the investable entities discussed in parts a and b? Will this allocation change for someone entering retirement? If so, why?