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To: Sun Tzu who wrote (430)	2/19/1999 2:58:00 PM
From: UCLAlumnus	Read Replies (1) \| Respond to of 10550

Sun, So what's the risk premium in TP-FX? Tim

To: Sun Tzu who wrote (430)	2/19/1999 4:32:00 PM
From: Iceberg	Read Replies (1) \| Respond to of 10550

>I don't look at it as a gift. Sun Tzu, Thanks for the correction. "Gift" wasn't the best choice of words on my part. What I meant to convey was that a premium, as I understand it, is something paid by someone to a recipient. Let me see if I understand what you are saying. Since you didn't pay any premium, I assume you expected to be the recipient of a premium...not as a gift as I suggested, but as compensation for taking a risk. Right? You said... >When the stock moved to 25, then the risk premium was only 10% to my estimated 27.5 If a premium is something someone pays, then who paid the 10% risk premium you mentioned? It must have been other investors, not you. And if they paid it, then you could have received the 10% risk premium by buying at 25 instead of 27.5. But since you expect a 25% risk premium, as opposed to a mere 10% risk premium, then the 10% obviously wasn't enough. Is this an accurate interpretation of your view of a risk premium? Ice