Explain the financial derivatives

Reference no: EM133236085

Financial Derivatives Assignment -

Q1. Explain the financial derivatives? Discuss the different types of financial derivatives along with their features.

Q2. Discuss the major functions or roles of derivative markets in an economy?

Q3. The following call option prices were observed for a stock on July 6 of a particular year.

Strike Price	Call
Strike Price	July	August
155	11.00	11.80
160	6.50	8.00
165	2.80	5.50
170	0.90	3.50

The stock is priced at 165.5(S0) and ignore dividends on the stock. The expirations are July 17 and August 21.

Compute the intrinsic values and time values of the following calls. Treat these calls as American options for purposes of determining the intrinsic value and time values.

a) July 155

b) July 160

c) July 170

d) August 160

e) August 170

Reference no: EM133236085

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