Abstract
Financial instruments can be traded on an exchange or over the counter (OTC). Exchange trades securities are standardized instruments. A clearinghouse in connection to a marketplace clears most securities. In such a way the clearinghouse is counterparty to both the seller and the buyer.
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For instance, the Black–Scholes model assumes that underlying asset prices fluctuate according to a lognormal process, whereas actual market price fluctuations do not necessarily follow this process.
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Röman, J.R.M. (2017). Trading Financial Instruments. In: Analytical Finance: Volume I. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-34027-2_1
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DOI: https://doi.org/10.1007/978-3-319-34027-2_1
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Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-319-34026-5
Online ISBN: 978-3-319-34027-2
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