Answer Happy

Question 3 Options are perceived as a new financial product by many, but like fomards, they were used several hundred years ago in trading during ancient civilizations. Now, with their usage in the Over-the- Counter (OTC) and derivatives market in Europe, the United Kingdom, the United States and later in Asian markets, options cannot be considered new financial instrument but have long played a big role in the economy. a) Why do you consider that an option is a more flexible instrument in your strategic financial planning? (2 Marks) b) Differentiate the term 'at-the-money' as compared to 'in-the-money' and 'out-of-money' in an options trade. (3 Marks) (Total: 5 Marks)