Option values have two essential components. What are these two components name and explain them?

Q: What is par value?

A: Stockholders’ equity is the measure of assets staying in a business after the sum total of the…

Q: Define then discuss Value-at-Risk.

A: The stock market is full of new policies and procedures. It get impacted by change in the government…

Q: What does "FMS option" imply exactly?

A: The term "US government program" refers to any initiative, policy, or project implemented by the…

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 horizon value?

A: Horizon value is the value of the project or the security at the end of a specified future date. The…

Q: Briefly explain Option Distinguish between Call option and a put option

A: Options are financial instruments whose value is based on underlying securities. An option contract…

Q: What are the most common DCF valuation models?

A: There are different types of DCF valuation models such as: 1.) BY using the terminal value technique…

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: Define Net realizable value.

A: Net realizable value is the expected cash to be received against a given asset.  Thus, Net…

Q: explain what is the risk-return principle with one example

A: The risk-return principle is a fundamental concept in finance that states that the potential return…

Q: Define each of the following terms:a. Option; call option; put option

A: Options: They are money related instruments subject to the derivatives of hidden protections, for…

Q: Explain HPRs and Inflation?

A: Answer: Holding period returns (HPRs): Holding period return (HPR) is one of the investment…

Q: What does maturity matching mean, and what is the logic behindthis policy?

A: Maturity matching It is a financing strategy for working capital. Under this strategy, financing of…

Q: What techniques can be used to analyze real options?

A: A choice accessible to the organization's managers related to the investment opportunities is known…

Q: Options have a unique set of terminology. Define the following terms: (5) Exercise value

A: Exercise value The exercise value is the cost at which it is conceivable to purchase or sell the…

Q: Why is the NPV preferred over the IRR?

A: Net Present Value is a method of finding the profitability of a project by discounting future cash…

Q: FMS option

A: Options are called financial derivatives that provide buyers with the right, but not the obligation,…

Q: +ve risks and -ve risks

A: A risk is an unexpected event that may impact and affect any area of your project says, people,…

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

A: Stock Option:A stock option (additionally referred to as a fairness option), offers an investor the…

Q: Using Put Call Parity, a protective put is equivalent to what simple options position?

A: Put-Call Parity is a fundamental concept in options trading that establishes an essential…

Q: What is discounting and compounding? What is the difference between them?

A: We need to use the equation of time value of money to explain the concept of discounting and…

Q: What is offer price?

A: Bid price is the maximum price which the buyer is willing to pay to purchase. In other words, it…

Q: Explain what is meant by trade-off theory.

A: The trade-off theory, in the context of finance, refers to a fundamental concept that businesses and…

Q: Explain the Trade-Off between Risk and Reward?

A: The trade-off means to lose one thing to achieve another thing. For example An organization is…

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: Explain the following terms, Bid Rate and Ask rate

A: Bid and Ask rates are two common rates used in financial markets especially in the foreign exchange…

Q: Define purchase option.

A:

Q: Give a detail example of option to expand

A: In order to expand the business operations and to invest in a particular project in the future with…

Q: Define the Make-or-Buy Decision?

A: A make or buy decision is to choose whether to manufacture the produce in-house or purchase it from…

Q: How is the term ‘net realizable value’ defined as used in the acronym LCNRV?

A: Inventory: It implies the current asset that is presented on the balance sheet of the company and…

Q: You agree to purchase a new vehicle from a car dealer for $36,000, and you want them to finance your…

A: The month to month installment speaks to the settled sum a borrower concurs to pay to the bank each…

Q: Define each of the following terms:a. Real option; managerial option; strategic option; embedded…

A: Real option: A real option is a desirable economic privilege or to give up a selection, often in…

Q: Identify some different types of real options and differentiateamong them.

A: Real Options are rights which enable  a manager to take a decision regarding business operations…

Q: Define risk-free asset?

A: Risk-free means that anything which does not have any kind of risk associated with it. They are free…

Q: What is Net realizable value?

A: Net realizable value means the amount that could be received after deducted all incidental expenses…