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Options:Exercise Price

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Options:Exercise Price

  • This topic has 7 replies, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • November 1, 2014 at 9:22 pm #207139
    Abeer
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    Sir I am having hard time in finding out about how exactly do we choose exercise price for options? Currency options to be precise..

    November 1, 2014 at 9:43 pm #207140
    Abeer
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    Also, please explain the way we get the exercise price right for interest rate options.

    November 2, 2014 at 9:56 am #207200
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    Unless the questions states a specific objective (i.e. a maximum or minimum exchange rate / interest rate to aim for) then ideally you should calculate for all the exercise prices available and then discuss.
    However most of the marks are gained by proving that you know how options work, and so if you are short of time then just pick any one of the exercise prices available.

    November 2, 2014 at 11:48 am #207229
    Abeer
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    Any exercise price? and then state assumption right?

    November 2, 2014 at 12:46 pm #207241
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    That is correct 🙂

    November 2, 2014 at 7:31 pm #207300
    Abeer
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    Thanks a ton 🙂

    November 3, 2014 at 4:41 pm #207420
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    You are welcome 🙂

    November 3, 2014 at 4:41 pm #207421
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    You are welcome 🙂

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    Posts
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