Computational question Flashcards
1
Q
find f
A
(1+rf) (1+f) = (1 + second yield)^2
2
Q
if the 2-year yield was 0.5% (orginally higher), what happens to european straddle price
A
Rfr goes down in year two, means q goes down, so call price goes down, put price goes up.
3
Q
At the money straddle meaning
A
The initial price
4
Q
European straddle
A
Hold calls and put
5
Q
European bull spread
A
calculating puts and calls from two different strike prices and choosing smaller combination
