Options are perceived as a new financial product by many, but like forwards, they were used...

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Options are perceived as a new financial product by many, but like forwards, they were used several hundred years ago in trading during ancient civilizations. Now, with their usage in the over-the-counter (OTC) and derivatives market in Europe, the United Kingdom, the United States and later in Asian markets, options cannot be considered new financial instrument but have long played a big role in the economy. a) Why do you consider that an option is more flexible instrument in your strategic financial planning? (4 Marks) b) Differentiate between 'at-the-money' compared to 'in-the-money' and 'out-of-money' in an options trade. (6 Marks) Options are perceived as a new financial product by many, but like forwards, they were used several hundred years ago in trading during ancient civilizations. Now, with their usage in the over-the-counter (OTC) and derivatives market in Europe, the United Kingdom, the United States and later in Asian markets, options cannot be considered new financial instrument but have long played a big role in the economy. a) Why do you consider that an option is more flexible instrument in your strategic financial planning? (4 Marks) b) Differentiate between 'at-the-money' compared to 'in-the-money' and 'out-of-money' in an options trade. (6 Marks)

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A Options are more flexible instruments in strategic financial planning because they allow investors to tailor their investments according to their sp... View the full answer