Question
Question 5 Options are perceived as a new financial product by many, but like forwards, they were used several hundred years ago in trading during
Question 5
Options are perceived as a new financial product by many, but like forwards, they were used
several hundred years ago in trading during ancient civilizations. Now, with their usage in the
over-the-counter (OTC) and derivatives market in Europe, the United Kingdom, the United
States and later in Asian markets, options cannot be considered new financial instrument but
have long played a big role in the economy.
a) Why do you consider that an option is more flexible instrument in your strategic financial
planning? (4 Marks)
b) Differentiate between at-the-money compared to in-the-money and out-of-money in an
options trade. (6 Marks)
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