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Finance (Derivative Securities) - Essay Example

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Finance & Accounting
Pages 3 (753 words)


Introduction Accounting and finance always define somewhat different things in total because the applicability of the same could not be matched with any other thing (Beasley, M et al. 2009). Accounting is the name of recording and interpreting the data from different standpoints and there are numerous things that come under the ambit of the same…

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Finance (Derivative Securities)

Industry analysis means to analyze the whole industry in which different companies relating to a single industry would be dominated, analyzed and count. Though there are number of industries currently found in the entire world and every industry has its own recognition and importance in a broad nutshell. Among number of things that come under the ambit of finance, the name of derivatives is one of them. There are different things that stride under the ambit of derivatives, like SWAP, options and forward contracts (You-lan Zhu 2004). The main perspective of this assignment is to analyze different options accordingly. Two of the questions mentioned in the case study are all about Plain Vanilla Swaps and there are two different options which have been taken into consideration for the same in total. Ans-1) European Options Option-1 K1 = 1.00 Option-2 K2 = 0.75 Option-3 K3 = 0.15 An option that can only be exercised at the end of its life, at its maturity is called European Option. European options tend to sometimes trade at a discount to its comparable American option. This is because American options allow investors more opportunities to exercise the contract. From the analysis, it is clear that the price of Option 1 is comparatively higher than that of K2 and K3 in total. ...
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