#### Learning Outcome Statements

My Note:

1. One-Period Binomial Model *a. describe and interpret the binomial option valuation model and its component terms;*
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2. Two-Period Binomial Model *b. calculate the no-arbitrage values of European and American options using a two-period binomial model;*
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c. identify an arbitrage opportunity involving options and describe the related arbitrage;*
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f. describe how the value of a European option can be analyzed as the present value of the option's expected payoff at expiration;*
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3. Interest Rate Options *d. describe how interest rate options are valued using a two-period binomial model;*
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e. calculate and interpret the value of an interest rate option using a two-period binomial model;*
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4. Black-Scholes-Merton Option Valuation Model *g. identify assumptions of the Black-Scholes-Merton option valuation model;*
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h. interpret the components of the Black-Scholes-Merton model as applied to call options in terms of a leveraged position in the underlying;*
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i. describe how the Black-Scholes-Merton model is used to value European options on equities and currencies;*
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5. Black Option Valuation Model *j. describe how the Black model is used to value European options on futures;*
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k. describe how the Black model is used to value European interest rate options
and European swaptions;* | |

6. Option Greeks and Implied Volatility *l. interpret each of the option Greeks;*
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m. describe how a delta hedge is executed;*
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n. describe the role of gamma risk in options trading;*
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o. define implied volatility and explain how it is used in options trading.*
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