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Derivatives




Composite Option


A currency option– usually on a foreign currency or a currency basket or index- that is made or written at an exchange rate quoted in the investor’s base currency, while the option price and payoff are quoted in a different currency at the exercise date. The opposite scenario does also hold.

A composite option is also referred to as a cross option, a joint option or simply as a compo option.



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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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