ECON 302 Chapter Notes -Interest Rate Swap, Underlying, Call Option
25 Nov 2011
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American-style option (also american option): an option which may be exercised at any time up to and including the expiration date. Basis point: one one-hundredth of one percentage point, most often used in quotation of spreads between interest rates or to describe changes in yields on securities. Break-even point: the price of the underlying instrument at which an option buyer just recovers the initial outlay or premium. For a call option, the break-even point is the exercise price plus the premium; a put option"s break-even point is the exercise price minus the premium. Commercial paper: a short-term unsecured promise to repay a fixed amount (representing borrowed funds plus interest) on a certain future date and at a specific place. The note stands on the general creditworthiness of the issuer or on the standing of a third party that is obligated to repay if the original borrower defaults. The most active commercial-paper market is in the.
