What is an unbalanced bid? Why might one be used?

Q: What Is Hedge against Marketplace Uncertainty?

A: Hedging is referred as the risk management strategy used to offset losses in investments by taking…

Q: What is the Joint Hypothesis and what are its implications for tests of asset pricing models?

A: The Capital Asset Pricing Model (CAPM) is a model that explains the relationship between expected…

Q: How widely used is real option analysis?

A: Real option analysis is the analysis of a company’s opportunity cost of an investment or a…

Q: Are you agree with the phrase(sentence): "The indifference (exchange) risk - return curve slop of a…

A: Exchange rate indifference curve indicates that the change in demand for goods and services with…

Q: what is the difference between a call option and a put option?

A: There are two types of options one is call option and other is put option and both are derivative…

Q: What assumptions and limitations does multiples valuation have?

A: Multiple valuation or relative valuation is a market based valuation method where the target company…

Q: Why might purchasing power parity fail to hold?

A: It refers to the relationship which indicates the same cost and same kinds of products in the market…

Q: Explain the issues involved in setting the bid price.

A: Bid price: The price that is offered for a commodity, service, and product is called bid price. It…

Q: What are some factors that acquiring firms consider when they set a bid price?

A: Three main factors are whether the purchasers observe the product offers worth, how many purchasers…

Q: What Does RiskReally Mean?

A: Risk: Risk can be defined as upcoming uncertainty about variation from anticipated earnings or…

Q: What is the y risk-free investment?

A: Risk-free rate of return is the rate of return that an investor expects from an investment in any…

Q: Can the risk premium be negative after an investment is undertaken or before?

A: The risk premium is the extra risk-free return to require the risk of project acknowledgment. This…

Q: What is an option? A call option? A put option?

A: Option: An option is a special type of contract which gives its holder the right but not obligation…

Q: Define the term Trade-Off between Risk and Reward?

A: Risk-Reward trade off refers to an investment principle which indicates higher the risk, higher is…

Q: Does greater risk imply a bad investment?

A: Risk assessment is the process for identifying and assessing risks associated with achieving your…

Q: Even if behavioral biases do not affect equilibrium asset prices, why might it still be important…

A: Answer: There exist two reasons why the behavioral biases do not impact equilibrium asset prices.…

Q: The Security Market Line plots _________ against ___________?

A: Systematic risk is the market risk or the undiversifiable risk which affects the overall market.…

Q: What is the intuition behind multiples or comparables valuation? What are the advantages of this…

A: Answer : What is the intuition behind multiples or comparable valuation? The intuition behind…

Q: Under what conditions is a market-based transfer price optimal?

A:

Q: Define weak form of market efficiency

A: Efficient Market Hypothesis is a hypothesis that states that the asset prices reflect all available…

Q: Define fair value hedges.

A:

Q: What kind of investment is considered to be risk-free?

A: A risk-free investment is an investment that has a minimum or no fluctuation from the expected…

Q: What is the fair value option?

A: Fair value: Fair value is the price at which, both seller and buyer agree to exchange the asset. So,…

Q: What are the limitations of TCE approach to the make or buy decision?

A: TCE Approach is Transaction Cost Economics Theory. It means an activity should be performed within…

Q: What is the relationship of risk to the investment?

A: There is a direct relationship between risk and return in investment decision making. It means…

Q: What is the bid-ask spread?

A: Banks maintain the stock of the currencies in which they trade. Acting as brokers, they earn a…

Q: Considering the unequal investments, which of the following techniques would be most approprlate for…

A: Payback Period: It is the period in which the project recovers the cash outflow.   Net Present…

Q: What is purchasing power parity? Why might purchasing power parity fail to hold?

A: To measure the prices of goods in different countries purchasing parity is used. As per the…

Q: What is the difference between a competitive bid and a negotiateddeal?

A: Negotiated deal: A negotiated bid contains only one general contractor who works in the best…

Q: did hedging reduce volatility of the realized price?Answer Yes or No and explain

A: Hedging can be referred as a strategy that is used by the investors to reduce the risk associated…

Q: Why does IPO underpricing exist?

A: IPO - IPO stands for Initial Public Offer. When company want to list their shares on the stock…

Q: What is out-of-the money option?

A: Out of money options are generally preferable for the investors. This is because they are more…

Q: What is idiosyncratic risk? How does it differ from market risk?

A: Idiosyncratic risk or unsystematic risk or specific risk is that risk which belongs to specific…

Q: NOT right for the buy-and-hold investment strategy?

A: Strategy refers to the plan which is followed by the managers to achieve the goals of an…

Q: What are some factors that affect a call option’s value?

A: Options are the strategies opted by investors in which investors have a right but not a commitment…

Q: Should the bid be lower than the ask for a market maker or a price taker? Explain

A: Market makers are a class of market participants who are willing to buy and sell securities at…

Q: What are the similarities and differences between the CML and SML as models of the risk return…

A: CML is an abbreviation for Capital Market Line and SML is an abbreviation for Security Market Line.…

Q: what is opportunity risk

A: Opportunity risk is a the risk off loosing a better opportunity i.e. if you have invested in a…

Q: What is the buy option?

A: A buy option involves two types which are : Buy call option Buy put option

Q: What are the weaknesses of the payback method?  What other options do you have?

A: Pay back period is period required to recover initial amount of investment.

Q: What are the weaknesses of the payback method?

A: Payback period is the amount of time required for firm to recover its initial investment in projects…