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Derivatives and Risk Management by Ranganatham Ranganatham, Madhumathi Madhumathi

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chapter 6

Option Instruments

LEARNING OBJECTIVES

After reading this chapter, you will be able to understand the

  • features of option contracts
  • types of option contracts
  • application of option contracts to reduce financial risk
CHAPTER OUTLINE

6.1 Introduction

6.2 Features of Option Instruments

6.3 Index Options

6.4 Currency Options

6.5 Interest Rate Options

6.6 Swap Otions

THE SITUATION

Sudhir Kamath owns 1000 equity shares of Infosys. There is an increasing trend in the market price of these shares. The company is also paying dividends regularly. Can he profit from the increasing prices without selling the shares in the market?

Ranjani Saxena is a risk manager of a firm. The firm has borrowed ₹ 5 million from a bank on a floating rate of ...

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