The fundamental formula for binomial pricing is identical between stock option and bond option. However, how to treat the dividend and coupon payments are different.\nExplain the difference between the two.
215929
As I understood your question you need a good book on pricing derivatives. \n\nTry this:\nHull , John - Options, Futures and Other Derivative Securities (5nd Ed.)\n\nSince direct links are not welcome here, you should open www.rapidshared.org -> choose e-books directory -> search for 'derivatives' -> get the direct link and spent couple of minutes reading the demanded chapters.
559054
You losses are always 100% in the case of options.\n\nIt's not like stocks where you can actually sell your shares when your losses are just 10%\n\nIf you cannot handle a 100% loss then you should stay away from options and move to safer investments like stocks, mutual funds, ETFs and Bonds.\n\nTop 3 Answerer in Business & Finance. (Vote for me)
392159
Shares splits/bonuses are almost always rounded down. \n\nThe terms are always put into the share bonus memorandum filing.
61641
If you have stock options, you have the right to purchase stock at a set price. The price you'll pay is set by the Board of Directors (usually). If the company is pre-IPO, the price may be quite low. The hope is that when the company goes public, your stock will be worth more than the option price.\n\nThe vesting schedule sets forth the time and amount of stock you can purchase.
28799
The source is an excellent intro to financial terms, especially the "dictionary" which covers acronyms and phrases.\n\nOff the top of my head:\n\n1. Time value recognizes that value changes with time.  A stock option (to buy or sell stock at a fixed price) is a wasting asset that may be worth less and less as the option date approaches and worth nothing if not exercised.  A contract to erect a building three years from now must recognize that the cost of materials and labor may change by then.\n\n2.  In financial, "discount" can mean that something has been taken into consideration.  The price of a stock today discounted the fact that earnings are expected to double by next year.\n\n3.  As a mortgage is paid off monthly at a fixed amount per month, the debt remaining is less with each payment reducing the interest (but not the interest rate) and more and more of the payments will go to reducing debt as the mortgage is amortized, reduced to zero over time.\n\n4.  Compounding means that if you receive interest on a bank savings account, you also receive interest on any previous interest received and kept in the account.  Compounding may be calculated daily on the account balance (interest posted) or perhaps semi-annually or annually depending on your agreement with the bank.  By extension, If the value of stocks in your IRA increase 10% per year, the value of the investment compounds (Take say $10,000 and multiply it by 0.10 for each year up to your retirement (and it continues to compound as you take out money during retirement).  This is the hidden value in SS personal savings accounts.\n\n5.  Net Present Value relates future value with the present value.  If you invest in IT (information technology) today, what will its future value be to your company, etc.?
539110
I assume, that an investor is investing in both stocks as well as bonds in emerging markets. The risk premia associated with stocks will change with varying interest rates. One way to reduce this risk is by diversifying your investment in stocks accross different countries. On the other hand, if one is investing only in bonds issued in emerging markets, one can take care to invest in a short duration bond portfolio so as to minimize interest rate risk.
271093
Both are same. If you are experienced trader and if you know options and futures, commodities are just like that. Same risk.\n\nlook at http://uscommoditiestrader.com
45990
Actually they're both different transactions. It's all part of a negotiation tactic. One usually tries to get the most value up front, so we try to get two cents out of them. When they feel reluctant to put their two cents in, we can take the next step and make a deal they can't refuse: we'll pay them to tell us their thoughts. But notice that it's not two pennies for your thoughts. That would create a negative cash flow. It's all written off as a marketing expense anyway.
433528
You're logic is flawed.  Not EVERYONE who invests uses the same identical methods and/or mathematical indexes, AND not all of them have an affect on the market.  \n\nMany, MANY different techniques are utilized... and your's would just be one more of thousands of "get rich" plans.\n\nDon't quit your day job.
635439
3 year - 3 years to maturity\n\ncallable - the company can call back the bond.  The terms are usually given in the prospectus, but it gives the company an option if interest rates drop a bit.  Then, they call the bond and reissue (if necessary) new ones at a lower rate\n\nfloating-rate - The coupon rate will float based on some given terms, usually tied to LIBOR or some other generally acceptable rate\n\nsenior - These notes have a higher priority on the assets of the firm on a default than the junior/subordinated notes.
450604
(book) sheldon natenburgs "option pricing and volitility"-the math involved in an option pricing model isnt as important if you know what you want out of the options. risk management? options are the way to go-countless strategies
475493
First of all, don't think your question is even right, but that's OK. This is option, not some software engineering - life cycle?\n\nWhen u said u paid $5 premium for a $10 call option, u mean the stock is currently trading at $10. If you exercise the call option u need to paid extra $1000 for the 100 shares of $10 stock xyz. You just paid $500 + $1000 = $1500 for 100 shrs  $10 stock means your  $1500 now becomes $1000 means you just lost $500.\n\nMy advice: Go to cboe.com, 1888options.com or buy the Mcmillan book and study...\n\nAnd by the way you remember don't use any broker that charge u more than $1 for 1 contract...\n\nGood luck!
561053
No, they are not the same thing.  \n\nI hope the following is helpful:\n \nNASDAQ - The National Association of Securities Dealers Automated Quotation\n\nSome Basic Vocabulary:  \n\nIndex - An unmanaged selection of securities whose collective performance is used as a standard to measure investment results  e.g. Nasdaq, Dow Jones, Standard and Poor's 500, Wilshire 5000.font\n\nNasdaq Composite Index - MARKET-value weighted index, where each company's securities affects Index in proportion to its market value; (market value is last sale price multiplied by total shares outstanding, calculated throughout the day)\n\nNOTE:  Nasdaq Composite index includes over 5,000 companies; therefore broad-based and widely used\n\nDow Jones Industrial Average Index - a PRICE-weighted average of 30 actively traded blue chip (high value) stocks, primarily industrials, but also American Express and AT &T Company.\nIt is the oldest and most widely quoted index; calculated by adding closing prices of component stocks and using special DIVISOR that is adjusted for splits and stock dividends equal to 10% or more of market value of an issue (as well as substitutions and mergers); quoted in points, not dollars\n\nBased on Dow Theory (Dow theory maintains that no real market trends exist unless correlation occurs in industrial, transportation and utility averages)\n\nTherefore, the main differences between Nasdaq and Dow Jones Indexes are:  number of companies used for calculations, whether market value-weighted or price-weighted, time and frequency of calculation, and use in Dow Jones Index of divisor in calculations\n\nOther terms:\n\nTSE - Toronto Stock Exchange (Canada's largest stock exchange)\nTSE300 - Toronto Stock Exchange 100 Index (Canadian form of S&P500)\n\nBull  - Investor whoo expects stock prices to rise\nBear - Investor who believes stock prices about to decline\n\nOptions - Give holder right to buy (call) or sell (put) a specified amount of an underlying security at a specific price within a specified time frame\n\n\nI can add that if you go to http://www.fantasystocks.com/glossary/, you can get a lot of good definitions/explanations re. Nasdaq, Dow Jones and other stock market related terms.
656257
The price history for the stock is adjusted for the amount of the split. \nSo if it's a 2 for 1 stock split, the price would be adjusted by half not JUST FOR TODAY'S stock price, but for all the prices going back in time.\n\nIt has no effect on the value of the stock.
71746
They are equivelent. Before you had 1 share of the company's stock. After you have 2 shares. Afterwards the share value, everything else being equal, is 1/2 the share value before. All it is, is a method for a company to lower the value of their stock shares by doubling the number of shares outstanding. There is the perseption among some companies that shares trading in the $30 to $40 range are more attractive to investors than shares trading in the $60 to $80 range. Generally but not always, the company will also raise the cash dividend at the same time.
110305
If you are familiar with the calculator this will be a sinch....\n\n** OOPS THIS IS FOR A TI CALC**\n\nIn a bond problem, we are given four of five possible inputs (N, I/Y, PMT,  PV, FV) \nand are asked to solve for the one not given. For example, you may be given the Number of \nPayments (N), the coupon paymen (PMT), and the bond price (PV) , and Face Value (FV) and ask to solve forthe Interest Rate (I/Y). Imagine all the different possible combinations and interpret each one \nas a financial problem. \n\nSuppose you wish to solve for the yield to maturity on a five-year bond with an $8 coupon and $100 face value selling for $100. \n\n1. Yield to Maturity: Input  5 [N],   8 [PMT],  -100 [PV], and 100 [FV]. Press [CPT] [I/Y]. \n\n2. Price: Input 5 [N], 8 [I/Y] , 8 [PMT], and 100 [FV].  Press [CPT] [PV]. \n\nSemiannual Interest (10 periods half-year periods) \n\n1. Yield to Maturity: Input  10 [N],   4 [PMT],  -100 [PV], and 100 [FV]. Press [CPT] [I/Y]. Result is rate over six months, and so double number to obtain annual rate compounded semiannually. \n\n2. Price: Input 5 [N], 4 [I/Y] , 4 [PMT], and 100 [FV].  Press [CPT] [PV].
291112
Bond prices go down as interest rates go up and vice versa.  Bonds need to pay the going rate in the market or they will not sell.  If interest rates go up, the rate that bonds must pay also goes up.  When these rates go up, any existing bonds that are being held drop in price because no one will pay the same price for a bond with a lower interest rate.  \n\nEx: I buy a bond today for $1000 with a coupon rate(interest rate) of 5%.  One year from now, a $1000 bond is available with a coupon rate of 6%.  An investor would no longer pay $1000 for the first bond because they could buy the second bond for the same price and receive more interest.  So the price of the 5% bond would drop.