Explain why an option is a derivative security

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Reference no: EM131316681

1. Explain why an option is a derivative security.

2. Is buying an option more or less risky than buying the underlying stock?

3. What is the difference between an option's price and its payoff?

4. List five factors that influence the prices of calls and puts.

5. What are the economic benefits which options provide?

Reference no: EM131316681

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