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I I ! An Introduction to Derivatives and Risk Management Don M. Chance Louisiana State University Robert Brooks University of Alabama THOMSON oj{ Au s r r ett e . a r e au . C .. nada . ~~".-."~'-~--"'---'"""" MeYlco' 5ing;1lpore· Spain' u nu e d K,.. gdom· umt e c ~t4t~es , c.~ ! , . THOMSON SOUTH-VVESTERN __~ Chapter 1 Preface XlII Iuuoduction PART I Options 21 Chapter 2 Chapter 3 Chapter -! Chapter 5 Chapter 6 Chapter 7 Structure of Options Markets 22 Principles of Option Pricing 54 Option Pricing Models: The Binomial Model 92 Option Pricing Models: The Black-Scholes-Merton Model Basic Option Strategies 181 Advanced Option Strategies 218 An Introduction…show more content…
i [ . I Chapter 3 Principles of Option Pricing 54 Basic Notation and Terminology 55 Principles of Call Option Pricing 57 Minimum l0lut oj a Call 57 Maximum value oj a Call 59 Value oj a Call at Expiration 59 Effect oj Time to Expiration 60 Effect ofExercise Price 62 Lower Bound oja European Call 65 American Call Versus European Call 67 Early Exercise oJAmerican Calls on Dividend-Paying Stochs 69 Effict oj Interest Rates

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