3251 definitions Flashcards
1
Q
What is discounting?
A
The process of adjusting a financial product for an earlier time based on the interest rate.
2
Q
What is an option? What are call and put options?
A
An option is a contract in which a buyer pays a fee to enter the contract. At the time of maturity the buyer has the option to receive some sort of payoff which depends on the value of the stock at maturity. Call gives the buyer the right to buy a certain amount of stock at a predetermined price at a predetermined time (maturity). Put gives the buyer the right to sell a certain amount of stock at a predetermined price at a predetermined time (maturity).
3
Q
A
