1 .1 .Introduction Spread options are options on the difference of two or more underlying asset prices. For a call option on the spread between two assets, the payoff at maturity can be written as C=max(0,S_1-S_2-K) for a put option P=max(S_1-S_2-K,0). we will have where S_1 and S_2 are the prices of two underlying assets, and K is the strike price. At maturity, if the spread S_1-S_2 is greater than the strike price K, the option holder will exercise the option and gain the difference between the spread and the strike price. If the spread is less than 0, the option holder will choose not to exercise the option, and the payoff is 0. 1.2. Zoology of spread options There are different kinds of Spread options are available in the markets, for example the calendar spread, which is based on the prices of the same commodity at two different time, The locational spreads, which is based on the difference between prices of two assets at different locations, and we call it quality spread, if its payoff …show more content…
These methods can be generally divided into two groups. One is the analytical approximation, and the other is the numerical method. Beside the most commonly used numerical techniques, such as Monte carlo method, Binomial tree and Finite differences (PDE solver) ,Dempster and Hong(2000) develop a fast fourier transform method for pricing the spread option. Ravindran(1993) and Pearson(1995) use the numerical integration to compute the spread option price. For analytical approximation, Kirk (1995) give an approximation and proposed a pricing formula for a spread options between two underlying futures contracts, Bjerksund-Stensland (2011) improve the Kirk’s formula to give a more accurate results. Carmona and Durrleman (2003) propose a approximation formulas for spread option by solving a system of nonlinear equation. Margrabe(1978) suggest that the spread option becomes an exchange option when the strike price is
In order to solve the issue CC&L facing, Freund and Stoddart proposed a business plan, which mainly focus on how they would restructure CC&L. In the business plan, CC&L was split into two parts; one is Connor, Clark & Lunn Investment Management (IM), and the other is Connor, Clark & Lunn Financial Group (FG).
TOBs are synthetically created short-term tax exempt instruments. A TOB sponsor will buy a portfolio of fixed rate, long term municipal bonds with ratings between AA-AAA and combine them with an interest rate swap to create short term tax exempt floating rate bonds.
Spokane Industries has contracted Franklin Electronics for an 18 month product development contract. Franklin Electronics is new to using project management methodologies and has not been exposed to earned value management methodologies. Even though Franklin and Spokane have worked together in the past, they have mainly used fixed-price contracts with little to no stipulations. For this project, Spokane Industries is requiring Franklin Electronics to use formalized project management methodologies, earned value cost schedules, and schedules for reports and meetings. Since Franklin Electronics had no experience with earned value management, the cost accounting group was trained in the methodology in order to bid for the project.
According to the Economics textbook, "it refers to the range of quantities of a commodity, which a consumer is willing and able to buy at different price levels at a given time." In short, it is where the customers are willing to buy supported by money.
“Options give you the right (without the obligation) to transact a security at a predetermined price within a certain time period. In a call option, the buyer has the right (but is not required) to buy an agreed quantity of a commodity or financial instrument (called the underlying asset) from a seller by a certain date (the expiry) for a certain price (the strike price). A put option is the right to sell the underlying stock at a predetermined strike price by a certain date” (Call Option vs Put Option, 2014).
Roll, R. & Ross, S.A.(1980).An empirical investigation of arbitrage pricing theory. Journal of Finance, 35(5), 1073-1103.
Leonard Prescott, vice president and general manager of Weaver-Yamazaki Pharmaceutical of Japan, believed that John Higgins, his executive assistant, was losing effectiveness in representing the U.S. parent company because of an extraordinary identification with the Japanese culture.
The Law of Comparative Advantage was introduced by David Ricardo in 1817 in his book ‘Principles of Political Economy and Taxation’. According to this classical theory, a comparative advantage exists for a country when it has a margin of superiority in the production of a certain commodity over others. Comparative advantage results from differing endowments in the factors of production like technology, natural endowments, climate, etc. among different countries. Therefore, each country exports the commodities which it can produce at a lower opportunity cost or, in other words, lower marginal cost of production and imports the rest. This would ultimately be beneficial for all countries engaging in free trade as each would gain through its specialization
Since the listing of KOSPI 200 futures in May 1996, the derivatives market has grown into one of the key derivatives markets in the world. In the meantime, the market has achieved a higher level of excellence in market operation and secured a trading system and fair market management, and consequently figures as a decent reference among derivatives markets. The brief history of Korean derivatives market related to the products is as follows:
Newton-Raphson method is of use when it comes to approximating the root or roots of an equation.
In recent times, the company Ripple and its crypto-token XRP have been spread far and wide around the monstrous void that is the internet. Via social media sites, YouTube videos, blogs, news headlines, and more XRP as almost become a household name. As a result of this widespread growth in popularity, masses of people have become obsessed with “Ripple” and want to know “how to purchase XRP” and “what the price of XRP amount to by year’s end”. With so much being said and so many people interested it is highly beneficial to inform the general public on what Ripple actually is and the precise function of XRP.
The issue in this case is whether there is a legally binding contract between Roland and Bernie. The things that needs to be considered is whether there is an agreement between Roland and Bernie. If there is an offer and acceptance, then there is an existence of agreement. According to Section 2(a) of the Contract Act 1950, offer can be defines as when one person implies his/her willingness to another in order to acquire their consent. (Abdullah et al, 2011) The person who make the offer is known as ‘offeror’ or ‘promisor’. (Lee and Detta, 2009) An offer can be made in the method of orally, by conduct, writing or by the mixture of these forms. An offer must require an effective communication with offeree. The formation of contract when offeree accepted the proposal. (Dass, 2005)
P&G’s purpose is to provide branded products and services of superior quality and value that improve the lives of the world’s consumers. P&G values their employees through leadership, ownership, integrity, passion for winning, and trust. P&G entices and recruits best people in the world, builds their organization by promoting and rewarding from within, and believes that their employees will always be the most important asset. P&G has many principles such as (1) showing respect to all individuals, (2) valuing differences, (3) inspiring and enabling employees to achieve high expectations, standards, and challenging goals, (4) valuing personal mastery, (5) believing that all individuals can and want to contribute to their fullest potential, (6)
A valid contract is an agreement including promises made between two or more parties with an intention of certain legal rights and legal responsibility that are enforceable. For there to be a contract – that must contain four essential elements- offer, acceptance, intention to create legal relations and consideration.
The company listed on the JSE (Ltd) that I have decided to focus on is Pick n Pay. I have chosen this company as, since the first store was established in 1967, 941 stores have been opened countrywide in South Africa (FastMoving, 2012), which leads me to believe that this specific franchise has a very good sense of business sustainability.