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Concepts · CA Final/Advanced Financial Management

Advanced Financial Management

Ch 3 · Derivatives Analysis & Valuation

5 concept points · 5 formulas · 4 exam-critical points.

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Concept
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Chart Summary
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Formula Sheet
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Important Points

⭐ Important points (exam-critical)

  • ⭐Put-Call parity violation → arbitrage opportunity.
  • ⭐Currency forward: Interest Rate Parity F = S × (1 + ih) / (1 + if).
  • ⭐Swap: equivalent to series of forward contracts.
  • ⭐Binomial model useful for American options & path-dependent options.

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