3.2 Two Kinds of Underlying Assets Investment assets: held for investment purposes by a significant numbers of investors. EXamples: stockS, bonds, gold Three different situations 1. The asset provides no income 2. The asset provides a known dollar income 3. The asset provides a known dividend yield Consumption assets: held primarily for consumption. EXamples: commodities such as copper, oil and live hogs Options, Futures, and Other Derivatives, 4th edition@ 2000 by John C. Hull Tang Yincai, C 2003, Shanghai Normal University3.2 Options, Futures, and Other Derivatives, 4th edition © 2000 by John C. Hull Tang Yincai, © 2003, Shanghai Normal University Two Kinds of Underlying Assets • Investment assets: held for investment purposes by a significant numbers of investors. Examples: stocks, bonds, gold. Three different situations: 1. The asset provides no income 2. The asset provides a known dollar income 3. The asset provides a known dividend yield • Consumption assets: held primarily for consumption. Examples: commodities such as copper, oil and live hogs