Price earnings derivative financial product
First Claim
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1. A method of using a ratio comprising price and earnings to value a financial product based upon at least one equity, the method comprising:
- selecting a ratio function comprising price and earnings for calculating a strike price to earnings ratio, the ratio function being associated with a set comprising at least one equity;
selecting a quantity, the quantity being associated with the set comprising at least one equity;
selecting a maturity price to earnings calculation technique associated with the set comprising the at least one equity;
calculating, using a programmed processor, a payoff using the ratio function, the maturity price to earnings calculation technique, and the quantity, wherein the calculating occurs after the selecting the quantity step; and
conducting a transaction, subsequent to the calculating, wherein the payoff comprises at least part of the transaction.
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Abstract
A system for and method of using a financial instrument to take a view on a price-to-earnings ratio for a set of one or more equities. The system and method may be used to commodify the price-to-earnings ratio for one or more equities, such as a stock or an index. The system and method may include a financial instrument that allows a user to take a view on an earnings, or ratio comprising price and earnings, for underlying equities.
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Citations
24 Claims
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1. A method of using a ratio comprising price and earnings to value a financial product based upon at least one equity, the method comprising:
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selecting a ratio function comprising price and earnings for calculating a strike price to earnings ratio, the ratio function being associated with a set comprising at least one equity; selecting a quantity, the quantity being associated with the set comprising at least one equity; selecting a maturity price to earnings calculation technique associated with the set comprising the at least one equity; calculating, using a programmed processor, a payoff using the ratio function, the maturity price to earnings calculation technique, and the quantity, wherein the calculating occurs after the selecting the quantity step; and conducting a transaction, subsequent to the calculating, wherein the payoff comprises at least part of the transaction. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 23)
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12. A method of using a ratio comprising price and earnings to value a financial product based upon at least one equity, the method comprising:
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selecting an algorithm for calculating a ratio comprising price and earnings on at least one future date and the ratio is a strike price to earnings ratio, the ratio being associated with a set comprising at least one equity; selecting a quantity, the quantity being associated with the set comprising at least one equity; selecting a maturity algorithm associated with the set comprising the at least one equity for calculating a maturity price to earning ratio; calculating, using a programmed processor, a payoff using a ratio produced by the algorithm, the maturity price to earnings ratio, and the quantity, wherein the calculating occurs after the selecting the quantity step; and conducting a transaction, subsequent to the calculating a payoff step, wherein the payoff comprises at least part of the transaction. - View Dependent Claims (13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 24)
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Specification