What is a limit order?

Q: What does the term “attainable set” mean?

A: The art of deciding the investment mix and policy, making the investments equivalent to its…

Q: Explain the call-put parity relation and how it is justified?

A: call-put parity relation 1. It shows the prices of calls and puts , consistency of underlying…

Q: What is broad averaging

A: Broad Averaging: Broad averaging is also known as peanut butter cost is a costing approach of…

Q: What is Gordon model?

A: Intrinsic value of a stock is based on the internal information of an organization. That is, market…

Q: In words, what is put-call parity?

A: Put-Call Parity It is a fundamental that shows the relation of option price i.e the European call…

Q: what is ROEL - ROEU?

A: ROE is the rate computed by dividing net income with share holder’s equity. It is the rate by which…

Q: What is naked call option?

A: An option is a financial derivative giving the buyer of option to buy or sell the option at a price…

Q: Briefly explain on Salam and Parallel Salam.

A: Salam and Parallel Salam are modes of Islamic financing which are useful for traders and small…

Q: What is feasible set?

A: When investors manage their ‘financial assets’, like ‘bonds’, ‘shares’ and other financial…

Q: What is indifference curve?

A: Indifference curve: It is a diagram indicating a mix of two items that give equivalent fulfillment…

Q: Explain put–call parity relationship

A: Put-Call parity is the concept that defines the relationship between price of European call option…

Q: What is the purpose of a Limit Test?

A: Definition:   Limit test: It checks the data by evaluating it with the predetermined upper and…

Q: What is lien?

A: Lien: This is a case or legitimate right against properties normally utilized as collateral so as to…

Q: WHAT'S THE ANSWER TO D, E AND F?

A: Given, Net nonoperating obligations (NNO) Return on equity (ROE) Nonoperating return component of…

Q: What is Mark-up chain?

A: Introduction: Markup is generally shown as a percentage of the cost or the sale price. The term…

Q: Define Volcker rule

A: Volcker Rule is a regulation that implies restrictions on the banks to involve in the stock market…

Q: Formula for put call parity?

A: Put call parity Put-Call parity defines the value of same class European put and call options. Put…

Q: What is a constraint?

A: Internal Control:   It refers to a set of rules, policies adopted by a business to ensure accuracy…

Q: What is an REA diagram?

A: Accounting is primarily concerned with identifying, recording, measuring, summarizing transactions…

Q: What is the decision rule for NPV?

A: Capital budgeting: Capital budgeting is a process by which the management can plan and evaluate the…

Q: What is the purpose of using the high-low method?

A: High-low method: In the high-low method, the semi variable-cost approximation is calculated by using…

Q: What is GAAP?

A: Generally Accepted Accounting Principles (GAAP): These are the guidelines necessary to create…

Q: What is the EBIT?

A: The income generated by a business in the course of normal operations, after deducting the direct…

Q: What are special allocations?

A: Introduction: Special allocation for a business is considered as distributing profits and losses…

Q: What is a quantity standard?

A: A quantity standard is the amount of materials that should be used in the production of a unit.…

Q: What is view integration?

A: View Integration:  Single model which is created for integrating multiple REA diagrams (which were…

Q: What is disbursal rate

A: Disbursal rate is an important concept in the realm of financial markets and in the realm of fintech…

Q: What is forward points?

A: Forward points are nothing but basis points added or subtracted from the spot rate of an underlying…

Q: What is a cfar?

A: Cash Flow at Risk (CFAR):Cash Flow at Risk is a term which focuses on the risk of receivables and…

Q: what is single index model?

A: Single index model refers to the asset pricing model that can be used to measure the risk and return…

Q: What is contra?

A: Contra in accounting terms means an account with balance that has opposite of the normal balance and…

Q: What is a cross rate?

A: Cross rate is an exchange rate of currency between two countries, but both countries are not using…

Q: What is a double-entry? Give an example?

A: Double entry: Double-entry refers to the double effect of each financial transaction that occurs.…

Q: straight line method?

A: Depreciation = (Historical cost - Salvage Value)/Useful life  Book Value of Asset = Historical cost…

Q: How can we compute the true IRR, or RIC, as a function of the MARR?

A: Minimum Acceptable rate of return is the minimum rate which the management wishes to have from any…

Q: What is hurdle rate?

A: Hurdle rate a rate usually used in capital budgeting decisions to calculate the acceptability of a…

Q: What does RI measure?

A: Residual Income: Residual income is the income earn over the minimum rate return of the company. In…

Q: Compute the thed Be

A: * As per Bartleby policy, when multiple different questions are asked then answer first only.…

Q: What is an allocation base? Give some examples.

A: When we discuss allocation base, it explains about the basis on which the overhead costs are…

Q: Define cardinality.

A: Cardinality: Cardinality refers to number of possible links of one table with another table.…

Q: What is inverse floater?

A: Introduction: This question is related to the concept of financial derivatives. Derivative…

Q: Define discriminant function

A: DISCRIMINANT FUNCTION- If we have a set of K classes then we may define a set of K discriminant…

Q: What is put–call parity?

A: Conditions where two or more things are equal are known as parity. It refers to two securities…

Interest Rate Risk Measurement and Management

Interest rate risk is a risk that arises due to fluctuation in interest rates. These interest rate risks control the value of fixed-return assets. Interest rates and the value of investments have an indirect relationship. When interest rates increase, the price of bonds or investments falls. Short-term investments carry lower risk than long-term investments as they have a short maturity period.