This case describes the situation faced by the SEC in implementing Rule 19c-5, which allowed multiple trading of listed options. It provides details on the history of the options market and asks the student to make a recommendation as to whether Rule 19c-5 should be implemented on schedule

This note demonstrates the use of Lotus models for financial forecasting. It uses a step-by-step approach with examples of how to tie the different elements together. An exercise is included that requires students to forecast financial statements for Walt Disney, Inc

This case deals with the introduction of put options in 1977. After a four-year experiment trading call options, the U.S. Securities and Exchange Commission (SEC) is about to begin the trading of put options. Ed Burton is faced with establishing trading strategies based on put-call parity. The...

This technical note covers the basics of interest rate derivatives. Specifically, it covers options on bonds, delayed payments, caps, floors, and swaptions. The appropriate option pricing model is presented for each derivative. In addition, the note covers how to estimate the input parameters in...

This case involves a decision to use a new financial product instead of a stock repurchase. The case requires the student to value a complex security and decide on the cost of each alternative. An interesting feature of the case is the different ways of valuing the complex security

This case deals with the introduction of put options in 1977. After a four-year experiment trading call options, the U.S. Securities and Exchange Commission (SEC) is about to begin the trading of put options. Ed Burton is faced with establishing trading strategies based on put-call parity. The...

This technical note expands on the previous note, "Forwards and Futures" (UVA-F-1427), which introduced the basics of forward and futures contracts. It begins with examples where the hedging was one-for-one and the maturity of the futures contract exactly matched the timing of the transaction....

This case concerns an analyst who must value a new type of derivative. Three versions of the derivative are described in the case, each requiring a different valuation approach. The case is an exercise in thinking about what the payoff of a derivative is and, based on that, how it should be valued

The purpose of the case is to provide an opportunity for students to evaluate the relative performance of portfolios. In the case, students are asked to select one portfolio from among eight possible choices. Here the selected portfolio will be included in a larger pan-European portfolio. This a...

This technical note compares two methods of treating debt usage in discounted-cash-flow valuation of investment projects or companies. The note illustrates that the Weighted Average Cost of Capital approach (WACC) and the Equity Residual approach (ER) yield equivalent results if consistent...