How design flexibility might influence investors preference

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Reference no: EM13923688

1. Explain why the difference between put and call prices depends on whether or not the underlying security pays a dividend during the life of the contracts.

2. When comparing futures and forward contracts, it has been said that futures are more liquid but forwards are more flexible. Explain what this statement means and comment on how differences in contract liquidity and design flexibility might influence an investor's preference in choosing one instrument over the other.

Reference no: EM13923688

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