AuthorTopic: 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.

CFA Discussion Topic: Please help on derivatives for the CFA exam

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