*New* get it cheaper: . Summary/samenvatting of the ESE Corporate Finance Major course Finance 2.
It is my most concise summary yet, with 4 pages it includes the necessary theory and formulas (taken from the official formula sheet) to make you succeed! The summary includes a handy index, all lectu...
Over-the-Counter (OTC): bypass exchange (public and regulated) → not easy to observe
Forward contract: binding agreement to buy/sell asset in future for price determined today.
→ Futures: same but institutionally/exchanges/standardized (features/quantity, delivery, price)
Payoff forward contract: Long forward: Spot Price at Expiration – Forward Price (𝑆𝑇 − 𝐹0 )
Short forward: Forward – Spot at Expiration (𝐹0 − 𝑆𝑇 )
Call options: non-binding agreement (right) to buy asset in the future at price determined today
→ Preserves upside potential, eliminates the downside (not exercised) Strike/exercise price: 𝐾
Exercise style: (1) European [only at expiration] (2) American [any time before expiration]
(3) Bermudan [only during specific periods]
Put options: right to sell and asset in the future at price determined today (“writer” has to buy)
Payoff: max(0, 𝐾 − 𝑆𝑇 ) [option allows you to sell for more than the spot price]
Profit: 𝑝𝑎𝑦𝑜𝑓𝑓 − 𝐹𝑉𝑜𝑓𝑂𝑝𝑡𝑖𝑜𝑛𝑃𝑟𝑒𝑚𝑖𝑢𝑚(𝑃)
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