Define each of the following terms: a. Option; call option; put option; b. Exercise value; strike price; c. Black-Scholes option pricing model© BrainMass Inc. brainmass.com October 25, 2018, 8:39 am ad1c9bdddf
a. Option - Options are extremely versatile securities that represent a contract which is sold by one party to another party offering the buyer the right, but not the obligation, to buy or sell a security or other financial asset at a previously agreed upon price during a specific period of time or on a specific date (exercise date). Options are used by traders to speculate, which can be very risky, while hedgers use options to decrease the risk of holding an asset.
Call option - These types of options give the owner the right to purchase 100 shares of a stock or an index at the strike price by the exercise date. Call options have the following four characteristics; 1) there is an underlying stock or index, 2) there is an expiration date of the option, 3) there is a strike price of the option and 4) the option is the right ...
The financial options and applications in corporate finances are discussed.
Models for Price Call Options
Chose two different models used to price call options. Detail each model and focus on comparing and contrasting the models.View Full Posting Details