Options & Futures I. Introduction to Derivatives Prof. Domenico Cuoco Term 5‚ 2013 What is a Derivative? Basic Types of Derivatives The Market for Derivatives Outline 1 What is a Derivative? 2 Basic Types of Derivatives 3 The Market for Derivatives Options & Futures‚ Prof. Domenico Cuoco‚ 2013 I. Introduction to Derivatives 2 What is a Derivative? Basic Types of Derivatives The Market for Derivatives What is a Derivative? Derivatives and Contingent
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Practice Questions-“Real Options” Some questions may require you to use financial calculator or Excel. (In the final exam‚ for students without financial calculator‚ writing down the formula will be enough. However‚ those formulas must be correct to get full credit. Therefore‚ it is a good practice to check whether you are correct by using Excel for these practice questions) 1. How are real options different from financial options? 2. Consider the following project data: (1) A
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question is whether it is possible to distinguish between fantasy and true science fiction. I am reminded of the analogy‚ attributable I believe‚ to Theodore Sturgeon‚ of the elf ascending vertically the side of a brick wall. In a science fiction story the knees of the elf would be bent‚ his center of gravity thrown forward‚ his stocking cap hanging down his neck‚ with his feet quite possibly equipped with some form of suction cups. In a fantasy‚ on the other hand‚ the elf would simply stride up the
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Fantasy faces Reality Joyce’s short story “Araby” shows us the moment of awakening from fantasy by a boy’s one-side love story. we sometimes experience when we continue to work on ourselves‚ understand that if something is causing regret‚ anger‚ unhappiness or and other “negative” emotion‚ we are‚ by definition‚ experiencing an illusion. We will experience the illusions we still think are real. We will do so because we have made the unreal to real‚ and the best way to understand that what we see
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exotic‚ songs serve as commentary on action. Brecht’s view is that actor should not impersonate‚ but narrate actions of another person‚ as if quoting facial gesture and movement. “The Brechtian style of acting is acting in quotation marks.” Brecht uses the example of an accident-eyewitness. To show bystanders what happened‚ he may imitate‚ say‚ the victim’s gait but will only quote what is relevant and necessary to his explanation. The Gestus: This is Brecht’s term for basic human attitudes - department
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European call option with strike price of K and maturity T and buys a put with the same strike price and maturity. Describe the investor’s position. The payoff to the investor is - max (ST - K ‚ 0) + max(K - ST‚ 0) This is K- ST in all circumstances. The investor’s position is the same as a short position in a forward contract with delivery price K. 8 .4.)Explain why brokers require margins when clients write options but not when they buy options? When an investor buys an option‚ cash must
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Real Option Memo To: Dave Jacobs From: James Jones Date: November 26‚ 2012 Re: College Education Intro and type of flexibility with this option The option I’m going to discuss in this memo is whether I should continue on with my college career year after year‚ or just to abandon receiving a higher education and make my part time job a full time job. From the 7S framework‚ my real option would be the Disinvest/Shrink then the scope down option (abandon). Sources of uncertainty There
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STOCK OPTIONS - AN EFFECTIVE COMPENSATION METHOD Stock Options have become the greatest form of remuneration for big names in organizations across the United States (Hall‚ 2000). The senior executives‚ who are given this option‚ can buy shares of the company at what Hall (2000) describes as the “exercise price”. They could be given “at the money”‚ “out of the money” or “in the money” price (Hall‚ 2000). Stock Options are helpful in motivating the holders to perform for the benefit of the company
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following are always positively related to the price of a European call option on a stock? c. The volatility 5. When we talked about Vega hedging‚ if a portfolio has 1000 shares of SPY and 10 contracts of at-the-money December 2013 put option on SPY (and nothing else in the portfolio)‚ is the portfolio vega neutral? c. No‚ the portfolio can never be vega neutral. 6. Which of the following is not true? a. When a CBOE option on IBM is exercised‚ IBM issues more stock 7. Which of the following
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The Hobbit is a fantasy novel about a peaceful hobbit that accompanies a wizard and several dwarves on a journey to steal the great treasures of the dragon Smaug and I believe it demonstrates or uses the features of the fantasy genre. The features of any genre are like a skeleton for the story of that particular genre. Different genres have different features such as different settings‚ characters‚ plot‚ themes and values. Features are like a list of criteria that is used to assess whether the novel
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