The document provides an overview of various types of exotic options, which are options with non-standard payoff structures. It describes packages, non-standard American options, forward start options, compound options, chooser options, barrier options, binary options, lookback options, shout options, Asian options, exchange options, and basket options. It also discusses how difficult exotic options are to hedge compared to vanilla options and describes the static options replication approach to approximating the value of exotic options.
A new derivation of the Black Scholes Equation (BSE) based on integral form stochastic calculus is presented. Construction of the BSE solution is based on infinitesimal perfect hedging. The perfect hedging on a finite time interval is a separate problem that does not change option pricing. The cost of hedging does not present an adjustment of the BS pricing. We discuss a more profound alternative approach to option pricing. It defines option price as a settlement between counterparties and in contrast to BS approach presents the market risk of the option premium.
. In some papers it have been remarked that derivation of the Black Scholes Equation (BSE) contains mathematical ambiguities. In particular in [2,3 ] there are two problems which can be raise by accepting Black Scholes (BS) pricing concept. One is technical derivation of the BSE and other the pricing definition of the option.
In this paper, we show how the ambiguities in derivation of the BSE can be eliminated.
We pay attention to option as a hedging instrument and present definition of the option price based on market risk weighting. In such approach, we define random market price for each market scenario. The spot price then is interpreted as a one that reflects balance between profit-loss expectations of the market participants.
In this paper, we show how the ambiguities in derivation of the BSE can be eliminated.
We pay attention to option as a hedging instrument and present definition of the option price based on market risk weighting. In such approach, we define random market price for each market scenario. The spot price then is interpreted as a one that reflects balance between profit-loss expectations of the market participants.
A new derivation of the Black Scholes Equation (BSE) based on integral form stochastic calculus is presented. Construction of the BSE solution is based on infinitesimal perfect hedging. The perfect hedging on a finite time interval is a separate problem that does not change option pricing. The cost of hedging does not present an adjustment of the BS pricing. We discuss a more profound alternative approach to option pricing. It defines option price as a settlement between counterparties and in contrast to BS approach presents the market risk of the option premium.
. In some papers it have been remarked that derivation of the Black Scholes Equation (BSE) contains mathematical ambiguities. In particular in [2,3 ] there are two problems which can be raise by accepting Black Scholes (BS) pricing concept. One is technical derivation of the BSE and other the pricing definition of the option.
In this paper, we show how the ambiguities in derivation of the BSE can be eliminated.
We pay attention to option as a hedging instrument and present definition of the option price based on market risk weighting. In such approach, we define random market price for each market scenario. The spot price then is interpreted as a one that reflects balance between profit-loss expectations of the market participants.
In this paper, we show how the ambiguities in derivation of the BSE can be eliminated.
We pay attention to option as a hedging instrument and present definition of the option price based on market risk weighting. In such approach, we define random market price for each market scenario. The spot price then is interpreted as a one that reflects balance between profit-loss expectations of the market participants.
In this paper, we show how the ambiguities in derivation of the BSE can be eliminated.
We pay attention to option as a hedging instrument and present definition of the option price based on market risk weighting. In such approach, we define random market price for each market scenario. The spot price then is interpreted as a one that reflects balance between profit-loss expectations of the market participants.
In this paper we show how the ambiguities in derivation of the BSE can be eliminated.
We pay attention to option as a hedging instrument and present definition of the option price based on market risk weighting. In such approach we define random market price for each market scenario. The spot price then is interpreted as a one that reflect balance between profit-loss expectations of the market participants
A new strain of avian (bird) virus has popped up in China and has .docxevonnehoggarth79783
A new strain of avian (bird) virus has popped up in China and has health officials at the World Health Organization are worried. They fear it may jump across species and infect humans, causing a pandemic. The virus is 100% lethal in birds, killing them within 24 to 48 hours. A human vaccine against the avian virus has been successfully manufactured in the U.S. and there is enough to inoculate the entire U.S. population. You are a scientist at the Center for Disease Control and have been called before Congress where they are debating whether to make immunizations against this avian flu legally mandatory for all US citizens.
Ignoring the constitutionality of such a law, in writing, present a scientifically persuasive case for why Congress should adopt your position.
In addition to making a persuasive argument for why this is the case, please state what the alternative strategy should be.
Position on Vaccination: One can protect the entire U.S. population against an epidemic without having to vaccinate everyone.
I chose position 2, and the idea no traveler can enter/leave China without the vaccination.
Alternatively, all travelers having been to/from China must have the vaccination to enter the US.
1
Chapter 8
Financial Options and
Applications in Corporate Finance
2
Topics in Chapter
Financial Options Terminology
Option Price Relationships
Black-Scholes Option Pricing Model
Put-Call Parity
3
Stock Price = + + +
D1
D2
D∞
(1 + rs )1
(1 + rs)∞
(1 + rs)2
Dividends (Dt)
Risk-free bond
Portfolio of stock and
risk-free bond that
replicates cash flows
of the option
Value of option must
be the same as the
replicating portfolio
Cost of
equity (rs)
The Big Picture:
The Value of a Stock Option
...
For value box in Ch 4 time value FM13.
‹#›
4
What is a financial option?
An option is a contract which gives its holder the right, but not the obligation, to buy (or sell) an asset at some predetermined price within a specified period of time.
5
What is the single most important
characteristic of an option?
It does not obligate its owner to take any action. It merely gives the owner the right to buy or sell an asset.
6
Option Terminology
Call option: An option to buy a specified number of shares of a security within some future period.
Put option: An option to sell a specified number of shares of a security within some future period.
7
Option Terminology
Strike (or exercise) price: The price stated in the option contract at which the security can be bought or sold.
Expiration date: The last date the option can be exercised.
8
Option Terminology (Continued)
Exercise value: The value of a call option if it were exercised today =
Max[0, Current stock price - Strike price]
Note: The exercise value is zero if the stock price is less than the strike price.
Option price: The market price of the option contract.
9
Option Ter.
In this paper, we show how the ambiguities in derivation of the BSE can be eliminated.
We pay attention to option as a hedging instrument and present definition of the option price based on market risk weighting. In such approach, we define random market price for each market scenario. The spot price then is interpreted as a one that reflects balance between profit-loss expectations of the market participants.
In this paper we show how the ambiguities in derivation of the BSE can be eliminated.
We pay attention to option as a hedging instrument and present definition of the option price based on market risk weighting. In such approach we define random market price for each market scenario. The spot price then is interpreted as a one that reflect balance between profit-loss expectations of the market participants
A new strain of avian (bird) virus has popped up in China and has .docxevonnehoggarth79783
A new strain of avian (bird) virus has popped up in China and has health officials at the World Health Organization are worried. They fear it may jump across species and infect humans, causing a pandemic. The virus is 100% lethal in birds, killing them within 24 to 48 hours. A human vaccine against the avian virus has been successfully manufactured in the U.S. and there is enough to inoculate the entire U.S. population. You are a scientist at the Center for Disease Control and have been called before Congress where they are debating whether to make immunizations against this avian flu legally mandatory for all US citizens.
Ignoring the constitutionality of such a law, in writing, present a scientifically persuasive case for why Congress should adopt your position.
In addition to making a persuasive argument for why this is the case, please state what the alternative strategy should be.
Position on Vaccination: One can protect the entire U.S. population against an epidemic without having to vaccinate everyone.
I chose position 2, and the idea no traveler can enter/leave China without the vaccination.
Alternatively, all travelers having been to/from China must have the vaccination to enter the US.
1
Chapter 8
Financial Options and
Applications in Corporate Finance
2
Topics in Chapter
Financial Options Terminology
Option Price Relationships
Black-Scholes Option Pricing Model
Put-Call Parity
3
Stock Price = + + +
D1
D2
D∞
(1 + rs )1
(1 + rs)∞
(1 + rs)2
Dividends (Dt)
Risk-free bond
Portfolio of stock and
risk-free bond that
replicates cash flows
of the option
Value of option must
be the same as the
replicating portfolio
Cost of
equity (rs)
The Big Picture:
The Value of a Stock Option
...
For value box in Ch 4 time value FM13.
‹#›
4
What is a financial option?
An option is a contract which gives its holder the right, but not the obligation, to buy (or sell) an asset at some predetermined price within a specified period of time.
5
What is the single most important
characteristic of an option?
It does not obligate its owner to take any action. It merely gives the owner the right to buy or sell an asset.
6
Option Terminology
Call option: An option to buy a specified number of shares of a security within some future period.
Put option: An option to sell a specified number of shares of a security within some future period.
7
Option Terminology
Strike (or exercise) price: The price stated in the option contract at which the security can be bought or sold.
Expiration date: The last date the option can be exercised.
8
Option Terminology (Continued)
Exercise value: The value of a call option if it were exercised today =
Max[0, Current stock price - Strike price]
Note: The exercise value is zero if the stock price is less than the strike price.
Option price: The market price of the option contract.
9
Option Ter.
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
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Learn how to use Binance Savings to expand your bitcoin holdings. Discover how to maximize your earnings on one of the most reliable cryptocurrency exchange platforms, as well as how to earn interest on your cryptocurrency holdings and the various savings choices available.
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Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
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