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Stock Replacement Strategy |
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Stock replacement strategy A strategy for enhancing a portfolio's return, used when the futures contract is expensive according to its theoretical price. The strategy involves a swap between the futures and a Treasury bill and stock portfolio. Stock Replacement Strategy An investment strategy where on buys derivatives to mimic the return on a stock. For example, one may buy deep-in-the-money options because increases in the share price on the underlying stock will likely result in equal increases in the price of the option. A stock replacement strategy seeks to make the same return for a lower cost and/or risk. See also: Synthetic Asset. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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