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Derivatives




ZEPO


A zero exercise price option which is a cash-settled European call option whose exercise price is zero or very close to zero. Since its being exercised is almost certain, this option replicates a long position taken in the underlying asset without any right in its proceeds (dividends or interest payments) up to expiration date. This type of option is typically instrumental to overcome restrictions imposed by governments in terms of the transfer of securities (transfer tax, ownership restriction, etc).



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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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