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## Seeking an NHL team to be a fan of

Posted 01-03-2009 at 06:09 PM by Marid Audran
Updated 01-26-2009 at 11:29 AM by Marid Audran

I was born and bred in Minnesota. I like the Twins, in part because they so often exceed expectations, as well as the Timberwolves, in part because they so often fail so spectacularly -- it's a little like being a fan of Charlie Brown. I like the Vikings well enough. But the Wild does nothing for me. Perhaps it's the "singular" team nickname, or perhaps it's the red-and-green team colors. In any case, I could use a different NHL team to follow.

The front-runner for my fan...
Posted in Sports, Miscellany

## Area newbie searches forum before posting a question, finds answer

Posted 01-03-2009 at 05:53 PM by Marid Audran
Updated 01-03-2009 at 06:12 PM by Marid Audran

(headline in the style of The Onion)

I had occasionally searched forums in the past, only to find either (a) nothing or (b) a set of three dozen links, none of which exactly answered my question.

I was wondering about a certain passage in McDonald, Derivatives Markets. So, with some reluctance, I searched the forum--and lo and behold I found a thread about the precise passage I was confused about, including sensible explanations.

Film at 11
Posted in Exams, MFE-3F

## you can do TeX!??

Posted 12-29-2008 at 02:07 AM by Marid Audran

testing, testing, $1^{\frac 2 3}+ 4_{5,6}$

Sweet!
Posted in Miscellany

## Why a European call option (no div.) costs more than spot minus strike

Posted 12-29-2008 at 01:52 AM by Marid Audran

I think the discussion and formula derivations in McDonald (pp. 294-95) are not as simple as they could be.*

"Spot minus strike" is the same thing as "exercise value," in the case of an American option. But I want to focus on European options, about which put-call parity says

C - P = PV(F) - PV(K).

The assumption of no dividends implies PV(F)=S, today's spot price. Applying this equality and adding P to both sides yields
...
Posted in Exams, MFE-3F

## Why European call options (no div.) with greater time to expiration tend to cost more

Posted 12-29-2008 at 01:26 AM by Marid Audran
Updated 12-29-2008 at 01:27 AM by Marid Audran (adding category)

McDonald (p. 297) points out that American call option premiums tend to increase with time to expiration. This fact is not hard to see.

McDonald then says that the same is true for European call options

Quote:
because, with no dividends, a European call has the same price as an otherwise identical American call.
I found this explanation nonintuitive. The following explanation by example makes more sense to me:

Let S_t be the spot price of the...
Posted in Exams, MFE-3F