What is the fair value option?

Q: Which is the better investment option?

A: The process of finding the present value using the future value, interest rate and the compounding…

Q: What is the IRR of this offer?

A: Capital budgeting methods are the used for finding the profitability of capital projects. It is a…

Q: What is meant by a “real option”?

A: Real option: It may be a selection made open to a firm's managers about the prospects for trade…

Q: What is the difference between a Put option and a Call option? Explain. Provide examples.

A: Option is a derivative instrument which gives a choice to its buyer to buy or sell the underlying…

Q: What is a derivative security?

A: Financial Instruments: It represents assets that are traded in the financial markets and are…

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: 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 exactly does the term "FMS option" imply and what is its significance?

A: A flexible manufacturing system (FMS) can boost productivity and minimize production costs. Flexible…

Q: What is meant by actuarially fair prices? What conditions will make Arrow-Debreu prices actuarially…

A: Fairtrade Minimum Price is defined as the minimum price, which used to get paid through the…

Q: What is option?

A: Options are the derivatives contract that gives investor discretion to sell or buy the assets like…

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: 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: What is the definition of "FMS option"?

A: Stock Option: An investor who purchases a stock option has the right, but not the responsibility, to…

Q: Why would anyone want to purchase an F or IF derivative type of investment?

A: Floater tranche(f) It refer to that type of security whose coupon rate copy the movement of index on…

Q: What is the risk premium?

A: CAPM is the method of calculating the expected return on investment. The formula to calculate the…

Q: FMS option

A: An option is the right to purchase a stock (or another asset) at a predetermined price and time. On…

Q: What is an alternative trading system (ATS)?

A: Alternative trading systems are generally helpful for people like investors & professional…

Q: What are the five variables that affect the value of an option, and how do changes in each of these…

A: Option price refers to the price at which buyers purchase the stock or have the right to buy or sell…

Q: Define fair value hedges.

A:

Q: What is flexibility option?

A: A financial instrument that provides the opportunity to the buyer and seller to purchase and sell…

Q: Determine the theoretical ex-rights price?

A: The determination of the theoretical ex-rights price is generally done when stocks are issued and…

Q: Is the accept-or-reject decision rule the same as in the simple -investment case? Explain how?

A: Yes, accept or reject decision rule is the same as in the simple investment because accept or reject…

Q: What are some types of real options?

A: Real options is defined as a capital budgeting decision with which the management may make a future…

Q: What exactly does "FMS option" mean?

A: The term FMS stands for flexible manufacturing system. It is a manufacturing system which is…

Q: What is market risk?

A: Investments in assets are subject to risks and uncertainty of returns  Risks can be systematic or…

Q: What is a fair value hedge?

A: Fair value hedge: It is a hedging method to manage the risk of changes in the fair value of a…

Q: Explain about the Hedging against fair value risk.

A: Financial instrument:   It is a monetary contract between two parties which acts as an evidence of…

Q: What is a bargain purchase option? How does it differ from other purchase options?

A: Purchase option: Purchase option is provision of certain lease contracts which provides the lessee…

Q: What is commercial risk?

A: In financial terms, risk is defined as the possibility that the real profits from an outcome or…

Q: What is market risk premium?

A: Market risk premium is an additional return investor will receive for holding the additional risk in…

Q: What is the difference between fair value and market fair value?

A: Fair value refers to the value that represents the worth of a particular item. It is the value that…

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: 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 the make or buy decision?

A: Managerial accounting:   Managerial accounting is more focused towards analyzing information and…

Q: What is a real option?

A: Real option It may be a selection made open to a firm's supervisors approximately the commerce…

Q: Explain the fair value option.

A: Fair Value Option: It is a process of measuring the financial assets and liabilities using the fair…

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 fundamental difference between US GAAP and IFRS?

A: US GAAP are the generally accepted accounting principles issued by United States of America to…

Q: What is a real option? What are some types of realoptions?

A: Real options: Real options are considering as right but not obligation to take a business decision.…

Q: What is the buy option?

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

Q: What is value at risk, VaR?

A: Value at Risk (VaR) is a financial metric that estimates the risk of an investment. More…

Q: What's the best ETF to buy? And why?

A: ETFs are the best popular traded option for investors looking for growth in their money with both…

Q: What is the importance of market risk premium?

A: Market risk premium Variance of the market return and the risk-free rate. It depicts the equity…

Q: What are those factors? Which is most AND least significant?

A: Following are the factors that affect option contract: Underlying Price Strike Price Time to…