Islamic Finance

Khalabah

September 10, 2021
Mutual Funds

Redemption Risk

September 10, 2021

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A quanto digital option that can only be exercised at its expiration date. It pays the difference between the spot price of the currency pair at maturity (quanto price: the conversion rate from the domestic currency to the quanto currency) and the strike price (for a call in case: spot price > strike price, and for a put when: spot price < strike price).

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