20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for December 2024 exams.
Get your discount code >>

Effective interest rate on options

This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
July 21, 2021 at 11:18 am #628994
lavenite
Member
- Topics: 13
- Replies: 5
If we are calculating the effective interest rate, does the net payment (the numerator in the calculation which includes actual interest payment and premium) also include the gain/loss made on exercising the option?
Thank you!
July 21, 2021 at 3:22 pm #629028
John Moffat
Keymaster
- Topics: 57
- Replies: 54470
The effective interest rate gives the effective interest if the option is exercised I.e the maximum interest rate or minimum interest rate depending on whether we are borrowing or investing.
Have you watched my free lectures on this?
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.