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g define interest rate caps, floors, and collars; Flashcards Preview
L1 60 Option Markets and Contracts
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L1 60 Option Markets and Contracts
Class (17):
A,B,C
A D Options Terminology, The Mechanics Of Trading Options
60.F: Compare Interest Rate Options With Forward Rate Agreements (Fras)
A Describe Call And Put Options;
B Distinguish Between European And American Options;
C Define The Concept Of Moneyness Of An Option;
D Compare Exchange Traded Options And Over The Counter Options;
E Identify The Types Of Options In Terms Of The Underlying Instruments;
G Define Interest Rate Caps, Floors, And Collars;
H Calculate And Interpret Option Payoffs And Explain How Interest Rate Options Differ From Other Types Of Options;
I Define Intrinsic Value And Time Value, And Explain Their Relationship;
J Determine The Minimum And Maximum Values Of European Options And American Options;
K Calculate And Interpret The Lowest Prices Of European And American Calls And Puts Based On The Rules For Minimum Values And Lower Bounds;
L Explain How Option Prices Are Affected By The Exercise Price And The Time To Expiration;
M Explain Put–Call Parity For European Options, And Explain How Put–Call Parity Is Related To Arbitrage And The Construction Of Synthetic Options;
N Explain How Cash Flows On The Underlying Asset Affect Put–Call Parity And The Lower Bounds Of Option Prices;
O Determine The Directional Effect Of An Interest Rate Change Or Volatility Change On An Option’s Price.