You buy a CFD share that will increase in value as the
underlying asset increases in price on the market.
In particular, compared to the constant long-term volatilities of
underlying asset price and counterparty's asset value in Wang et al.
Threshold Theory is interested in decisions concerning two parameters of the
underlying asset: the value of the
underlying asset and its volatility.
Especially, recursive algorithm based on a forward induction procedure is developed to compute the risk-neutral probability of each different node for the
underlying asset reaching a maximum or minimum price in the binomial tree.
The lessor in a long-term lease will report a lease receivable and a deferred inflow of resources (at an amount adjusted for any prepayments), while continuing to report the
underlying asset as its own.
Identification of the
underlying asset. A condition of validity of the contract is that the asset must be physical, exchangeable, clearly identified.
(i)
Underlying asset price, St, satisfied the stochastic differential equations d[S.sub.t] = ([[mu].sub.t] - [q.sub.t]) [S.sub.t] dt + [sigma] [S.sub.t] d[B.sub.H] (t), (3) where [[mu].sub.t] is the expected return, [q.sub.t] denotes dividend yield, [sigma] is volatility, and [B.sub.H](t) is a fractional Brownian motion.
* Type B: A lease in which the lessee is not expected to consume more than an insignificant portion of the economic benefits embedded in the
underlying asset over the lease term.
The writer of the option, however, has the obligation to sell the
underlying asset if the buyer of the call option decides on exercising his right to buy.
Option contracts that give the buyer the right to buy an
underlying asset are called "call options", whereas contracts which give the buyer the right to sell the
underlying asset are called "put options".
Concerns were raised following Dubai World's property arm Nakheel's decision to use seabed as an
underlying asset for its recent Islamic bond, or sukuk, to trade creditors.