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Derivatives




Supershare


An equity derivative which, on its expiration date, entitles the holder to a given dollar value proportion of assets of a superfund, provided that the value of underlying assets on that date lies within a specific range (lower and upper levels). Otherwise, the supershare expires worthless. For example, suppose a superfund has purchased a portfolio consisting of all the stocks on a given stock exchange in proportion to their market values. Thus, a level 1000 supershare would entitle its holder to receive the index value divided by 1000 if the index finished between 1000 and 1010 during the life of the supershare. It would produce, say, a return between $1 and $1.8. All supershares below level 1000 would expire worthless.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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