Finance School of management Providing Information A firm, earning $10 million in profits in a good year is faced with deciding whether to reinvest it in the business, pay it out in cash dividends to shareholders, or use it to buy back its own shares Whenever a new financial instrument is introduced new possibilities for information extraction are created as a" by-product The trading of option contracts the information about the volatilities offinancial markets uesTc21 Finance School of Management Providing Information – A firm, earning $10 million in profits in a good year, is faced with deciding whether to reinvest it in the business, pay it out in cash dividends to shareholders, or use it to buy back its own shares. ❖ Whenever a new financial instrument is introduced, new possibilities for information extraction are created as a “by-product”. – The trading of option contracts & the information about the volatilities of financial markets