hich one speculate decrease in volatility?   Choose 1:   A.   Long straddle   B.   Long strangle   C.   Long butterfly spread   D.   Short butterfly spread

Q: What is the benefits and draw backs of long straddle strategy?

A: A long straddle is when the investor buys both a call and a put option on the same stock, with the…

Q: For one lump sum FV, the PV of your future liquidity decreases a. as FV increases.b. as t decreases.…

A: Where:PV is the present ValueFV is the future Valuer is the discount ratet is number of years

Q: Define an inverted yield curve. What does it indicate?

A: A yield curve is a graph that shows the yields of bonds with different maturities. Normally, a yield…

Q: Another of Matilda’s colleagues is looking at the yield curve and asks for an explanation as to why…

A: Biased expectation theory is defined as the theory of term structure of the rate of interest. In the…

Q: e is said to be a normal good if indifference e indifference curves associated with chang on-labor…

A: Leisure refers to the time when an employee is not working can spend the desired time in their own…

Q: dentify the decision rule that best fits each of the following descriptions.    Dollar profit…

A: IRR is internal rate of return at which NPV is zero.

Q: In a regression analysis, the variable that is being predicted is the a. Intervening variable O b.…

A: The variable that is attempted to clarify or anticipate is known as the the response variable,…

Q: Assume an hypothetical consumer faced by the following utility function; U=X^2Y ( squared times y).…

A: Utility function : U = X2Y  Px = 4.2  , Px' = 4.8  Py = 4 , Py' = 5  We find the utility level at…

Q: Under which of the following term structure theories is market supply and demand the main cause of…

A: B. Segmented markets

Q: With a decrease in time preference, the supply of loanable funds will increase.   Select one: True…

A: Loanable funds includes all forms of credit, such as loans, bonds, or savings deposits. There is an…

Q: Breifly explain what "playing the yield curve" means.

A: The yield on a bond refers to the annual return that one gets as a bond matures. A yield curve is a…

Q: In creating the T2 measure one mixes P* and T-bills to match the _____ of the market and in creating…

A: Introduction: Treasury bills are instruments issued by US government which are of short term nature…

Q: What is the most likely impact on return on equity of an increase in operating expense margin, all…

A: Operating expenses are required to run the business. AN increase in operating expenses reduces the…

Q: Consider the generalised linear regression model: y = Xẞ + e, with E[e] = 0 and E[ee] = 022. Let the…

A: The objective of the question is to identify the incorrect statements about the OLS and GLS…

Q: Consider the following regression Pt * - Pt = .07(1.4) + .4*Pt (3.6) + et where Pt * is Shiller’s ex…

A: The efficient markets theory is a theoretical framework that explains the functioning of financial…

Q: How do you calculate a weighted beta?

A: In portfolio there are number of stock present in portfolio. We have to calculate weight of each…

Q: 6. p= ($20, 0.4; $40, 0.6). Use a concave utility function to graphically illustrate each of the…

A: The objective of the question is to illustrate the concept of expected utility using a concave…

Q: Which of the following statements are true? A. The lower the M-squared the better. B. The higher…

A: higher the sharpe ratio , the better the portfolio is. higher the treynor ratio, the better the…

Q: Pick ONE of the two options... Option 1: Diminishing marginal utility holds that the additional…

A: One would experience diminishing marginal utility for a good or service over time as they became…

Q: What is the Decreasing Returns to Scale? Can you please explain and give a definition, thank you.

A: The concept of decreasing return to scale is majorly used in production process and production…

Q: Consider the generalised linear regression model: y = Xẞ + e, with E[e] = 0 and E[ee] = 022. Let the…

A: The question is asking us to evaluate the properties of the Ordinary Least Squares (OLS) and…

Q: 1. Discuss the following briefly. a. Relative Value Concept b. Value for money Concept c.…

A: Note : As per the guidelines, only first three parts will be solved. Kindly post the last part…

Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…

A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…

Q: what is the key deference between Value - at - Risk ( VaR ) and volatility ? More specifically, what…

A: Volatility is a traditional measure of risk. Because of certain disadvantages in using volatility as…

Q: lternatives’ useful lives are different, B/C ratio analysis should preferably be based on: Select

A: Introduction : In simple words, the benefit to cost ratio is method to evaluate the effectiveness of…

Q: State the decision criteria for each of the following. (2)

A: Decision Rule: Profitbaility Index (PI): Greater than one is acceptable NPV: Project is…

Q: What is the difference between arithmetic and geometric mean returns?

A: The difference between arithmetic mean return and geometric mean return is mainly in two aspects…

Q: In a binomial tree model of a put option, why is the value of the upper node always 0 and in a call…

A: The binomial tree model is a simplified method used in option pricing, where the price of the…

Q: MIRR is considered to be a _______ return since it assumes reinvestment at _______. IRR is…

A: The IRR refers to the internal rate of return that equates the present value of cash inflows and the…

Q: What theorem is this a plain-language interpretation of? "Leaving an investment that loses money on…

A: The term "investment" describes the distribution of resources, most commonly money, with the hope of…

Q: When modeling the expected return of an income producing property, why should it be defined, for…

A: Step 1: Understand the concepts of NOI growth and vacancy rate.NOI (Net Operating Income) Growth:…

Q: The _______________ the coefficient of variation, the ______ the risk. a. higher; lower b. more…

A: Risk is the possibility of suffering harm or loss. It is the chance that an event or action will…

Q: investors

A: Introduction: Indifference curve is a concept in economics which shows combination of a couple of…

Q: Suppose the consumer has a Mean-Variance utility, u(ra, 0₂) = −(9% — rz)² – o², and there are a…

A: The necessary rate of return on an organization's investments to meet the demands of its capital…

Q: Internal Rate of Return is the discount rate that sets NPV to 0. True or false?

A: IRR is the required rate of return for the project to have zero Net Present value.IRR can be…

Q: Describe the Incremental B/C-Ratio Analysis?

A: Benefit cost analysis: Benefit cost analysis refers to analyzing the desirability of project where…

Q: 3. Consider the two independent investments in the following table. Investment A Probability 0.25…

A: In this problem we need to find out the expected value of payoff of each investment and then we are…

Q: What are some reasons that net PP&E might grow proportionally tosales, and what are some reasons…

A: Property, plant & equipment are company's long term assets important for the company's…

Q: What is the reason P/E Ratio become lower and higher?

A: The Price Earnings Ratio or P/E Ratio defines the relationship between the stock price and earning…

Q: Consider the generalised linear regression model: y = Xẞ + e, with E[e] = 0 and E[ee] = 022. Let the…

A: The question is asking us to evaluate the properties of the OLS and GLS estimators in the context of…

Q: Does the Present Value (PV) technique is based on return?

A: One of the important decisions that are taken by the management is to make the investment decisions…

Q: Consider the three stocks in the following table. P+ represents price at time t, and Qe represents…

A: Rate of return:The “rate of return” is a financial metric that represents the profit or gain…

Q: 15. In the mean-standard deviation graph an indifference curve has a ____________slope. a. negative…

A: Indifference curve is that point on the graph, at which there is tradeoff between risk and returns.

Q: Hello may i ask for the NPV, where the PV Factor come? Are there have formula?

A: Introduction:PV factor -It is used for calculating the present value of cash to be received in…

Risk Analysis

Risk management is the entire walkthrough process of helping the organization manage risks or avoid them altogether. It is an in-depth study to determine the risks and uncertainties faced by the business and how these impact the objectives and outcomes of the business. Risk analysis is a procedure of risk assessment followed by the management of an organization to avoid risks that may harm the functioning and efficiency of the company.