I understand Binary Credit Options. What I don’t understand is that this blue box example never states the strike price, yet the two solutions use a strike price of $1,000. Is this an error on CFAI’s part, or is there an assumption that if the strike price is not given we should use the par value?
CFAI loves this product…In schweser it does states that the strike price is at par.
By default, the strike price is at par. If it’s not specified, that’s best guess we can have.
OK, thanks. Guess I should have pulled my Schweser books back out to check before posting. I’ve been working blue boxes & EOC in CFAI this week for review…
As you said, CFAI book does miss the strike price. Schweser did a better on this matter.