A friend of yours tells you she holds an American call option that is very deep- in-the-money. She tells you she’s going to exercise it now and cash in on her winnings. Is this a wise move to make?

what happens If you would lose money by exercising an option immediately

True/false An option is a financial contract that gives the owner the right to buy or sell some asset at a fixed price on or before a given date. The put-call parity is derived based on the principal of no arbitrage. That is, the put-call parity equation holds only when the market is reasonably good enough so that arbitrage opportunities are not allowed. Today Jim bought a call option and Jill wrote a call option. The options are exactly the same (with the same underlying asset, same exercise price, same expiration date, same in every aspect). When the underlying stock price changes, for every dollar Jim gains, Jill loses a dollar, and vice versa. In reality, stock option contracts are based on the unit of 100 shares and expire on the third Friday of the month. An out of the money option means that if you exercise the option now you will be able to get money out of it.

Options have a unique set of terminology. Define the following terms: (12) Out-of-the-money call

E. All choices are incorrect 21-Which of the following statements is true? A. Investments that have a positive net present value should be considered for acceptance B. Investments that yield a positive internal rate of return should be accepted C. Investments that pay back in five years or less should always be accepted D. Investments that have a positive net present value should always be accepted E. All choices are incorrect ?" ora best answered

The terminal cap rate used for valuation purposes in a DCF is fundamentally different than the discount rate used in that same DCF. The assumed sale of the property takes place at the end of your hold period, generally 10 years later in most models. The property is older and the market and the economy have changed. With that said, what do you believe to be the right approach for terminal cap rate selection in a DCF on a development project and why?

Hanshaben

1. If two potential investments are mutually exclusive,:   a. They are only offered to wealthy investors at exclusive boutiquesb. You should do both deals because they are profitable with positive NPV’sc. By definition an investor could only invest in one of themd. You would need to invest in both investments by definition.

I have been working on the question below and I'm stuck on how to finish it up.  I have provided what I've done so far.  Is what I've done so far correct?  And how do I finish up the problem? Here is the question: Suppose that C is the price of a European call option to purchase a security whose present price is S. Show that if C>S then there is an opportunity for arbitrage (i.e. risk-less profit). You may assume the interest rate is r=0 so that the present value calculations are unnecessary. My work so far: There is an opportunity for arbitrage if we can create a portfolio that initially (time t=0) generates a zero net cash flow or a cash inflow, but still produce a positive or zero cash inflow at the time of expiration. Assume we are going to short sell one call option C, and buy one stock S. Consider the cash flows at time t=0.Cash flow of selling one call option: +CCash flow of buying one stock: -STherefore, since C>S, we have an initial cash inflow of C-S>0. We will now…

1. What are three significant differences between income property finance and owner occupied single family residential finance 2. You are considering a loan or investment in an income property. The projected DSCR is too low relative to like properties. What does that potentially tell you? 3. You are considering a loan or investment in an income property. The market Cap Rate is significantly higher than suggested by current NOI on the subject property relative to the asking price. Discuss the implications and potential causes,