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In finance, an option is a contract which conveys to its owner, the holder, the right, but not the obligation, to buy or sell a specific quantity of an underlying asset or instrument at a specified strike price on or before a specified date, depending on the style of the option. Options are typically acquired by purchase, as a form of ...
An option that conveys to the owner the right to buy something at a certain price is a "call option"; an option that conveys the right of the owner to sell something at a certain price is a "put option". Both are commonly traded, but for clarity, the call option is more frequently discussed.
In finance, a bond option is an option to buy or sell a bond at a certain price on or before the option expiry date. [1] These instruments are typically traded OTC. A European bond option is an option to buy or sell a bond at a certain date in future for a predetermined price. An American bond option is an option to buy or sell a bond on or ...
Real options valuation, also often termed real options analysis, [1] (ROV or ROA) applies option valuation techniques to capital budgeting decisions. [2] A real option itself, is the right—but not the obligation—to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a capital investment project. [3]
Basing the exam on core curriculum makes it a level playing field exam, giving it meaningful results and enabling it to measure reasoning ability. [9] [1] The test contains 124 multiple-choice questions. There are approximately 32 management questions, 31 marketing questions, 33 finance questions, and 28 managerial accounting questions.
Contingent claim. In finance, a contingent claim is a derivative whose future payoff depends on the value of another “ underlying ” asset, [1][2] or more generally, that is dependent on the realization of some uncertain future event. [3] These are so named, since there is only a payoff under certain contingencies. [4]
An option contract, or simply option, is defined as "a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer". [ 1 ] Option contracts are common in relation to property (see below) and in professional sports. An option contract is a type of contract that protects an offeree from ...
A long butterfly options strategy consists of the following options: Long 1 call with a strike price of (X − a) Short 2 calls with a strike price of X. Long 1 call with a strike price of (X + a) where X = the spot price (i.e. current market price of underlying) and a > 0. Using put–call parity a long butterfly can also be created as follows: