supposeyou are going to short sell so you are borrowingsecuritiesfrommineportfolioandyo
are sellingthem to someone else what mighthappen
a dividendis beingprayedduring the agreement
if it is in physicaltermsyouwouldn'thave the securityanymore
it is a borrowingtransactionso I should not be harmed in anyway so youhave to
pay thedevidends to me
votingrightsduringgeneralmeeting I have to show that I am theowneroff thesecurities
shortsqueezed
the spot contractpayoffdiagram
valueoftheshare is 25 if thevaluegoesup the valueofthecontractwillgoup as well whenyoubuyat
s andyousell at maturityday at 30thenyou willget30as a cashflow payoffdiagram and whatis
plotted on the xaxis is the valueof theunderlying at maturity
theunderlying S spotprice
spotprice at maturity 1whenthe contractendswhenyousellyourstockagain t
, chapter1 3 forwardcontracts
he forwardcontract
underlying uncertainty
buytheunderlying
selltheunderlying
onwardcontract isfuturecontract
to now T
toyingsellsmth delivery
productIphone payment
CASHFLOW AP
price 100 AP deliveryprice pricewillprayed at t but yougettheunderlying St spotprice
validsalespurchasecontract the net ofwhichthe forwardcontract will giveyou 5 OP
be weagreeon the with 5 uncertain
product price
HANDSHAKE no CASHFLOW
differences
spotcontract yousellyourIphone andget 100immediately
financialmarkets yousellyourIphone and 2days laten thepaymentwill take place
forwardcontract we will agree that thepayment the delivery will take place at sometime in
the future called thematurity
day
are sellingthem to someone else what mighthappen
a dividendis beingprayedduring the agreement
if it is in physicaltermsyouwouldn'thave the securityanymore
it is a borrowingtransactionso I should not be harmed in anyway so youhave to
pay thedevidends to me
votingrightsduringgeneralmeeting I have to show that I am theowneroff thesecurities
shortsqueezed
the spot contractpayoffdiagram
valueoftheshare is 25 if thevaluegoesup the valueofthecontractwillgoup as well whenyoubuyat
s andyousell at maturityday at 30thenyou willget30as a cashflow payoffdiagram and whatis
plotted on the xaxis is the valueof theunderlying at maturity
theunderlying S spotprice
spotprice at maturity 1whenthe contractendswhenyousellyourstockagain t
, chapter1 3 forwardcontracts
he forwardcontract
underlying uncertainty
buytheunderlying
selltheunderlying
onwardcontract isfuturecontract
to now T
toyingsellsmth delivery
productIphone payment
CASHFLOW AP
price 100 AP deliveryprice pricewillprayed at t but yougettheunderlying St spotprice
validsalespurchasecontract the net ofwhichthe forwardcontract will giveyou 5 OP
be weagreeon the with 5 uncertain
product price
HANDSHAKE no CASHFLOW
differences
spotcontract yousellyourIphone andget 100immediately
financialmarkets yousellyourIphone and 2days laten thepaymentwill take place
forwardcontract we will agree that thepayment the delivery will take place at sometime in
the future called thematurity
day
