Chapter 15 (exam 3)

Chapter 15 (exam 3) - Chapter15 Options DerivativeSecurities

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Chapter 15 Options
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Derivative Securities Financial derivative securities:   derive all or part of their  value from another (underlying) security      »   Equity derivative securities  derive all, or part,         of their value from the equity of a company     »   Interest rate options  derive their value from         fixed income securities
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Options Options are  claims on the underlying  security Options are  created by investors, sold to  other investors American vs. European
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Why Options Markets? Options  expand the opportunity set   available to investors Buyer’s maximum loss  is known in  advance
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Options Terminology Call : Buyer has the  right but not the obligation to  purchase a fixed quantity  from the seller at a  fixed  price  before a  certain date Put : Buyer has the right but not the obligation to  sell  a fixed quantity  to the option seller  at a fixed price  before a certain date
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Options Terminology Exercise (strike) price:
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This note was uploaded on 12/10/2011 for the course FIN 401 taught by Professor Staff during the Spring '08 term at Miami University.

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Chapter 15 (exam 3) - Chapter15 Options DerivativeSecurities

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