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Derivatives

  Derivatives   |   Terms
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  • September 8, 2021
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Weighted Average Rate Option

An average rate option in which the weighting of a given periodical price or rate (daily, weekly, monthly, ..) is defined and agreed by the parties in their agreement. This option allows investors who are not certain of the price/rate to capitalize, instead, on their knowledge of the timing and size of cash flows.

It is also known as a weighted average price option, or for short as WARO.


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