Differences between the fare lock and regular equity options

Assignment Help Business Economics
Reference no: EM132410921

Some airlines offer their customers a fare lock. Instead of booking a flight directly, you can hold on to a reserved fare for a certain time - for a fee, of course.

a) Under which conditions (i.e., your expectations about flight prices) would consider to buy the fare lock?

b) The fare lock looks very much like an option. Try therefore to describe it in option terminology! (e.g., What are strike price, maturity and the underlying? Is it cash or physically settled, a call or a put option? Of American, European or Bermudan type?....)

c) What are the main differences between the fare lock and regular equity options?

Reference no: EM132410921

Questions Cloud

Discuss the pros and cons of net present value : The basic objective of a corporation is to maximize the wealth of its stockholders. Stockholders' wealth is measured by the value of their shares
Discusses negligence in the healthcare environment : Your hospital's legal counsel to prepare a presentation for your hospital's medical team that discusses negligence in the healthcare environment.
Gm cost of the money market hedge : If the spot rate moved from Lit 1293 at the start of the year to Lit 1349 at the end of the year, what was GM's cost of the money market hedge?
What price should be charged : If the company marks up total cost by 0.42, what price should be charged if 56,000 units are expected to be sold?
Differences between the fare lock and regular equity options : Some airlines offer their customers a fare lock. Instead of booking a flight directly, you can hold on to a reserved fare for a certain time
What is the amount x if the swap is set up at par : Assuming that the current spot price for gold is USD 1,508 per ounce and the risk-free interest rate is r = 2%, what is the amount X if the swap is set up
What is the price of a year bond paying semiannual coupons : What is the price of a 3-year bond paying semiannual coupons with coupon rate 4% and face value 100, assuming continuous compounding?
Dreams of trespass : In 'Dreams of Trespass' discuss How the institution and concept of the harem emerges as complex and variable.
How much is the present value of operating the concession : How much is the present value of operating the concession stand for 11 more years with the option to abandon operating and collect the lease payments in year 1?

Reviews

Write a Review

Business Economics Questions & Answers

  Combinations of price and quantity supplied

Calculate the price elasticity of supply for each of the following combinations of price and quantity supplied. In each case, determine whether supply is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic in each case.

  Conducting an internal environmental scan

This section provides the opportunity to develop your course project. Conducting an internal environmental scan or organizational assessment, provides the ability to put the strategy audit together.

  Apartment after the imposition of rent controls

Draw a supply and demand graph to illustrate what will happen to the rental price of an apartment after the imposition of rent controls. Do you think this policy will benefit students? Why or why not?

  How is rent determined on plots of land of different quality

How is rent determined on plots of land of different quality? Does it matter whether or not the supply of factor inputs used on the land is perfectly elastic? Suppose that the factor supply curve is perfectly inelastic. What happens to land rent on e..

  Describe governmental efforts to address market failure

Describe governmental efforts to address market failure such as monopoly power, externalities, and public goods.

  Minimize the business recovery time

You are the Chief Security Officer for a Video Club Store; List the measures that you will institute to minimize the Business Recovery time.

  Qbased on the production function parametera which industry

q.based on the production function parametera. which industry or industries appears to exhibit decreasing returns to

  Create a claim using the proven technique

Create a claim using the proven technique below to get venture capital money for a new product idea. Use your own new product idea or pick an innovative product that is already on the market and act like it’s a new idea for which you are trying to ge..

  An aggregate supply curve represents relationship between

An aggregate supply curve represents the relationship between the:

  Develop a plan to implement your strategy to go business

You have owned and operated a successful brick-and-mortar business for several years. Due to increased competition from other retailers, you have decided.

  Advantage of the theory of tax capitalization

In order to host the Winter Olympic Games the city of Vancouver incurred a large debt, which will have to be repaid over time. Reflecting on this fact, one Vancouver resident complained, “The average guy is going to see his taxes increase” [Austen, 2..

  What present value p is equal to this series of payments

You receive payments at the end of each Quarter starting at the end of Quarter 1 and lasting 5 years (so the last payment you receive is at the end of Quarter 20). These payments are an equal series of payments of $500 for all 20 payment periods. The..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd