Compounding factor and Reverse risk reversal: Difference between pages

Revision as of 07:21, 1 May 2022

Options speculation.

A composite speculative deal in two options, also known as a bear spread.

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-(CF).
+''Options speculation''.
-A number greater than one which we multiply a present value by, to work out its [[Future Value]] (FV) as:
+A composite speculative deal in two options, also known as a bear spread.
-FV = CF x present value.
+== See also ==
+* [[Bear spread]]
+* [[Bull spread]]
+* [[Risk reversal]]
-The periodic Compounding Factor is calculated from the periodic yield as:
+[[Category:The_business_context]]
+[[Category:Financial_products_and_markets]]
-CF = ( 1 + periodic yield )<sup>n</sup>
-Where:
-n = number of periods
-'''Example'''
-Annual effective yield (r) = 6%.
-Number of years in the total period (n) = 2.
-Then:
-Compounding Factor = ( 1 + r )<sup>n</sup>
-= 1.06<sup>2</sup>
-= 1.1236.
-== See also ==
-* [[Compounding effect]]
-* [[Discount factor]]
-* [[Future value]]
-* [[Present value]]