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- Topic: Please help on derivatives for the CFA exam
| Author | Topic: Please help on derivatives for the CFA exam |
|---|---|
| wellspring @2006-03-04 18:49:05 |
Hi all. I'm preparing for the level 1 exam this June. I was studying Derivatives Investments part first because it was one of my favorite topics in my undergrad, but I guess I'm not grabbing the concept of the "lower bound of a European call." It is on the page 33 in Study Session 16, and I think the notes do not provide sufficient explanation to me. Maybe it's just me. Please anybody who could help me understand the concept better please help! Many thanks!! |
| Box815 @2006-03-05 18:55:59 |
Not that far along yet but remember that the since European options can't be early exercised the intrinsic value of a deep in the money call is greater than its market value. The buyer has a cost of capital to account for. I hesitated to respond because I don't know if this is on point. Just something to think about. |
