标题: Interest Rate Options - Effective Loan amount with Calls vs. Puts [打印本页] 作者: malbec 时间: 2011-7-13 16:37 标题: Interest Rate Options - Effective Loan amount with Calls vs. Puts
This is something that hurt me in Sample 2.
With regard to interest rate options, why, when calculating the base amount off which the effective interest rate will be computed, do you ADD the cost of puts and SUBTRACT the cost of calls?
For example, if you have a loan to be made in 30 days on $1,000,000, you would calculate the FV of a call option you want to buy and subtract it from 1,000,000. The opposite is true with a put, you would calculate the FV and ADD it to the 1,000,000.
I don't understand this at all. Any help is appreciated.作者: wilslm 时间: 2011-7-13 16:38
You don't own the call option, if it increases in value your bond loses value.
You own the put option, if it increases in value you gain作者: Swanand 时间: 2011-7-13 16:38
cpk123 Wrote:
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> what do you mean? where in Sample 2?
I don't know the question number, but it was where you had to construct a collar with a call that had a 100,000 premium and a put that had a 130,000 premium.作者: SFoyil 时间: 2011-7-13 16:38
sample or mock?
CP作者: neil1234 时间: 2011-7-13 16:38
cpk123 Wrote:
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> sample or mock?
