Derivatives (3)

Derivatives(3) - A long(short forward is an obligation to buy(sell the un-derlying asset at a speci±ed time in the future at a speci±ed price A

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A derivative security is a security that depends in a known nonrandom way on some other value (the underlying value). The underlying value can be a stock price, market index, interest rate, commodity price, weather, an outcome of a football game or a horserace, etc. Examples: forwards, futures, swaps, options, swaptions, futures options, caps, Foors, captions, Foortions, etc.
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Unformatted text preview: A long (short) forward is an obligation to buy (sell) the un-derlying asset at a speci±ed time in the future at a speci±ed price. A European call (put) option is a right to buy (sell) the underlying asset at a speci±ed time in the future at a spec-i±ed price. An American call (put) option is . . ....
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This note was uploaded on 10/20/2010 for the course FINA 124 taught by Professor Ismaildalla during the Spring '10 term at GWU.

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