Management and Organizational Studies 1023A/B Lecture : MOS 1023 Finance Lecture 3

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Maria Ferraro

Document Summary

Derivatives have been around a long time and new ones are being inventing all the time. Cost is lower to buy an option than to buy the actual share. Leverage is getting a higher result (return) for the same or less effort (investment) Buyer of the option has the choice seller is obligated to fulfill contract if buyer exercises right. European options can only be exercised on the expiration date. American options can be exercised on any day up to the exercise date (most common) Bermudan options have specific dates up until the expiration date when the option can be exercised (causes price fluctuations) You local grocery store had turkeys on sale, but unfortunately were hold out. The cashier gave you a rain check that allows you to purchase a turkey any time in the next month at the sales price. What kind of option might this be an example of: bermudan option, american option, european option, thanksgiving option.