CORPORATE FINANCE (FINANCIAL OPTIONS)

Running Head: Corporate Finance Corporate Finance Student`s name Instructor`s name Course title Submission date Corporate Finance A call option in finance is a contact that is made by two people about a certain commodity. The buyer who has made the call has the right to make a buy but he is not under any obligation to do that. On the other hand, the seller is under obligation to sell the agreed commodity to the buyer if he so wishes. It is of paramount importance to note that the buyer buys the commodity hoping that the price of the commodity may move up in the future. However, the seller hopes that the price will not rise or he may decide to give some of the profit he may gain if he waits to sell the commodity later (Moles, Parrino & Kidwell, 2010). On the other hand, put is a contact between two parties...