New Words dedicate:give, devote(one's time, energy, life, etc. to a noble cause or purpose If you dedicate yourself to something you decide to give a lot of time and effort to it because you think it is important
oissue: bring out (esp. sth. printed and /or official) for the notice of the public发布,发行 -----The school issued a statement about its plans to the press. ---th newsletter(简报) is issued three times a year. -----The Ministry of Finance has decided to issue new government bonds(债券)
Three Alternative Strategies · Take position in: -the option and the underlying -2 or more options of the same type This is known as spread -a mixture of calls and puts This is known as a combination
A Simple Binomial Model of Stock Price Movements In a binomial model, the stock price at the BEGINNING of period can lead to only 2 stock prices at the END of that period
The stock Price Assumption Consider a stock whose price is s In a short period of time of length At the change in then stock price S is assumed to be normal with mean Sdt and standard deviation os√△, that is, S follows geometric Brownian motion ds=u Sdt+oSdz Then dInS=( )dt+oda
Example AFI has SOLD for $300,000 a European call on 100,000 shares of a non-dividend paying stock: S 0 =49 =50 r=5%=20% μ=13% T =20 weeks The Black-Scholes value of the option is $240,000 How does the Fl hedge its risk?
