What is Lump-sum cash-value option?

Q: What is the break-even stock price for the protective put?

A: A protective put is when an investor has bought (long) the underlying asset and at the same time…

Q: What is the market risk premium (rM - rRF)?

A: The market risk premium can be found using the CAPM Model As per CAPM Model, expected return = Risk…

Q: why cash flow at t=0 of for a long future contract is different to long call option cash flow at t=0

A: EXPLANATOIN:- Forwarding transactions are start selling transactions that define the exchanging of a…

Q: What’s the difference between a financial optionand a real option? What are some specific typesof…

A: Answer: Differences between financial options and real options: Financial options are those…

Q: options contracts

A: An option contract illustrates a two-party agreement that authorises a transaction on a certain…

Q: In a qualitative analysis, what factors affect the value of a real option?

A: An alternate choice that is accessible to the organization's managers taking investment…

Q: What effect does Time expiration have on call option price?

A: Time to Expiration in derivatives is the last day that the options or futures are valid. On or…

Q: Define a call option’s exercise value. Why is the actual market price of a call optionusually above…

A: Option contracts are the financial derivative instruments which gives the right but not obligation…

Q: Option A Option B $ Net Present Value Which option should be accepted? should be accepted.…

A: The decision regarding to make the investment in the option between the two options available to the…

Q: What is a financial option? What is the singlemost important characteristic of an option?

A: Answer: A type of financial security that derives its value from the value of a particular…

Q: What is in-the-money option?

A: Option is a financial instrument that gives the right to buy/sell an underlying in future date at a…

Q: Is the risk-free rate the Treasury yield?

A: The risk-free rate refers to the rate of return on an investment that is having zero risk of loss.…

Q: Explain discounted cash Dow techniques (DCFs)?

A:

Q: Define a call option’s exercise value. Why is the market price of acall option always above its…

A: Answer: A call option is basically a deal that gives the option buyer the right to purchase…

Q: Explain Total Return Swap?

A: Swaps are agreement between different businesses and financial institutions  which is customized as…

Q: Why do options typically sell at prices higher than their exercise values?

A: An asset produced by stock exchanges is a financial option. These are sold by investors and…

Q: Explain Price Return Swap?

A: A derivative contract which enables two parties to exchange financial instruments, cash flows,…

Q: Explain the following terms, Option price and Strike price

A: Option price and strike price are essential terms which are used in derivative markets. These are…

Q: Compare the mutually exclusive alternatives based on the rate of return?

A: Mutually exclusive projects are the projects out of which one best project is selected due to lack…

Q: What impact does each of the followingparameters have on the value of a call option?(2) Strike price

A: A call option is a derivative instrument and thus,  it derives its value from some underlying asset.…

Q: Explain the following terms, In-the money option and At-the-money option.

A:

Q: Define Black-Scholes option pricing model

A: Assumptions of Black-Scholes option pricing models: There is no dividend during the lifetime of the…

Q: What is the relationship between the efficient portfolio and the feasible portfolio?

A: An efficient portfolio can be defined as portfolio which maximizes return for given level of risk or…

Q: t is payoff to put option holder on expiry?

A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…

Q: What is the payoff to call option buyer and seller?

A: Call option A call option is referred to as the financial contract which provides its holder an…

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: in the straddle option what is good to have an options with strike price equal, higher  or less than…

A: Straddle means Either Buying a Call as well as a Put Option or selling the call as well as put…

Q: What is the portfolio's return?

A: The total investment returns produced on individual assets multiplied by the weight class of that…

Q: is payoff to call option buyer or h

A: A call option is an instrument which provides its holder an option to buy an underlying asset on a…

Q: What are the Black-Scholes Options Pricing Model's underlying assumptions?

A: The Black-Scholes Options Pricing Model can be defined as the pricing model used to ascertain the…

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: If the time to expiration falls and the put price rises, then what has happened to the put option’s…

A: Options are derivative contracts, it gives an investor the right (but not obligation) to buy/sell an…

Q: What is financial futures?

A: Financial futures are the contracts that are used for the selling and purchasing of different types…

Q: What must be the price of a put option with the same strike price and expiration?

A:

Q: to put option buyer or hol

A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…

Q: What effect does Risk-free rate have on call option price?

A: Risk-free rate is the rate of return from an investment having no risk or zero risk. In other words,…

Q: What is the purpose of the Black–Scholes Option Pricing Model?

A: Black-Scholes is a pricing model used to determine the fair price or theoretical value for a call or…

Q: What is a swap?

A: Derivative are those assets , in which their value are based on value of other assets.  It includes…

Q: ption? What is payoff to call optio

A: A call option is an instrument which provides its holder an option to buy an underlying asset on a…