Why short selling are risky than buying margin?

Q: " The sale forecast is the cornerstone for profit planning," why?

A: Definition: Operating budget: The operating budget is that budget that is prepared to plan all…

Q: Define semistrong form of market efficiency

A: Answer: Efficient market is one where the market price constitutes a balanced estimate of…

Q: risk implications of improving net profit margin to increase Return on Equity?

A: Net profit margin is the percentage of net profit to sales revenue

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 concept of Contango, Backwardation & Roll-Yield? Also explain how positive and negative…

A: An investor executes a trade in the market based on the current and expected future position of…

Q: Why are secondary market prices relevant for a firm

A: Secondary market can be defined as the market where securities which have been already issued in the…

Q: Relative valuation has several disadvantages. Which of the following is NOT?   a. There is the…

A: In the context of the given question, we are required to find out the correct option from the…

Q: Why do you think Dividend Irrelevance theory is unrealistic?

A: The dividend irrelevance theory was proposed by Merton Miller and Franco Modigliani. According to…

Q: Explain how useful the price mechanism is in tackling the basic economic problem?

A: the main role of price mechanism in basic economic problem is allocate scare resources in market…

Q: why buying on margin is less riskier than short selling?

A: Trading on margin is a process of borrowing funds from a brokerage firm in order to execute trade…

Q: Why are options being sold at prices higher than their strike value?

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

Q: Is capital rationing always a bad thing? Explain

A: Capital rationing: Capital rationing is restriction bestowed upon new investments in the…

Q: What makes the risk-adjusted discount rate approach appealing?

A: Answer: The approximation of the present cash value for high risk assets is called adjusted discount…

Q: Explain in your own words how increasing Price-to-Book ratio could affect the investment decision.

A: Price to book ratio (P/B) is determined by dividing price per share of a firm to its book value per…

Q: Semistrong Efficiency If a market is semistrong form efficient, is it also weak form efficient?…

A: A semi-strong form of market efficiency exists when security prices already reflect all publicly…

Q: What does it mean for a market to be “efficient”?

A: The market is efficient in the scenario when the stock price in the present market is not…

Q: Explain the reasons why do investors prefer high or low pay out ratio? ​​

A: Dividend refers to that portion of the profits which is distributed among the shareholders as a…

Q: Why would a company choose to factor itsreceivables, given that it will get less money than…

A: Sales means delivery of goods and services by the seller. It can be for cash sales or sales made on…

Q: What would be the expected change in profit?

A: "Contribution Margin: The Contribution Margin is also can be treated on a gross or per unit basis.…

Q: Why is it often difficult for the averageinvestor to take advantage of underpricing?

A: Under Pricing of the stock refers to the situation when the current market price of the company’s…

Q: What might cause a firm’s intrinsic value to be different from its actualmarket value?

A: Intrinsic Value is one of the vital component used in valuation of a particular company. Intrinsic…

Q: What is the financial advantage (disadvantage) of accepting the outside supplier's offer?

A: Make or buy decision: It is the decision made by the company to manufacture the product or buy it…

Q: why is there a trade-off between liquidity and solvency?

A: A firm may raise capital through different sources, including equity shares, preference shares,…

Q: the selling price have to be?

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

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: Investors can only get normal profit”. Give detailed explanation on this statement and apply the…

A: According to efficient market theory if market are efficient than it is not possible for investors…

Q: Do you think investors should practice dollar cost averaging when investing their money? Why or why…

A: Dollar-Cost Averaging: Dollar-Cost averaging is an investment approach that involves investing an…

Q: What if the seller lacks sufficient information to be able to accurately estimate returns?

A: A seller may not be able to make an accurate estimate regarding returns due to multiple factors like…

Q: What will you do if your market does not develop as quickly as you predicted? What if your market…

A: There are four ways to predict the market- 1)-Momentum 2)-Mean Reversion 3)-Martingales 4)-The…

Q: of investor prefer fixed income

A: Risk-Averse-: Some investor who is a Risk-Averse has the trait of inclining toward preventing loss…

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: advantages of negative interest rate policies?

A: There are pros and cons of negative interest rate policies. In fact, in my opinion negative interest…

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: The risk-adjusted discount rate reduces investment. True or false?

A: The estimation of the present value of cash for high-risk investment is known as a risk-adjusted…

Q: Why does the use of debt lower the profit margin and the ROA?

A: Company needs to raise the fund to have the capital which needs for the business for multiple…