a)
To complete: The given sentences for every investor.
Introduction:
The contract that provides its owner the right to sell or buy some of the assets at a fixed price before or on the given date is an option.
b)
To complete: The given sentences for every investor.
Introduction:
The contract that provides its owner the right to sell or buy some of the assets at a fixed price before or on the given date is an option.
c)
To complete: The given sentences for every investor.
Introduction:
The contract that provides its owner the right to sell or buy some of the assets at a fixed price before or on the given date is an option.
d)
To complete: The given sentences for every investor.
Introduction:
The contract that provides its owner the right to sell or buy some of the assets at a fixed price before or on the given date is an option.
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Fundamentals of Corporate Finance
- explain how an interest rate swap can help investors to transform assets. Use appropriate examples and diagrams to explain your answer. (200word)arrow_forwardWhich of these will increase the value of a call option? I. An increase in the market value of the underlying asset II. An increase in the option's exercise (or strike) price III. A decrease in the market value of the underlying asset IV. An increase in the volatility of the underlying asset's returns A) I and Il only в) I only C) I and IV only D) Il and III onlyarrow_forward[S1] A put option gives the holder theright to sell a stock or other financialsecurities at a specified price at sometime in the future. [S2] A holder shouldexercise the call option if the marketprice on the expiry date is more thanthe contract price. A. Both are trueB. Both are falseC. S1 is trueD. S2 is truearrow_forward
- What is a REIT What are the advantages and disadvantages of REITs List and Describe the different types of REITs What is an OPTION Differentiate between a PUT and a CALL OPTION List and Describe the different types of OPTIONS What is a REPO What are the advantages and disadvantages of REPOS List and Describe the different types of REPOS What is the formula for calculating REPO RATE Define (a) Market Risk (b) Interest Rate Risk (c) Commodity Risk (d) Currency Riskarrow_forwardConsider a security that pays income to its holders (e.g., a dividend-paying stock, or acoupon bond). Should the forward price of this security (for a contract that matures attime T), F0,T, be higher than, lower than, or equal to the security's current spot price?Why?.arrow_forwardQ9. How would you hedge the risk of a price rise using a derivative? Group of answer choices 1. You would take out a spot contract to sell the underlying. 2. You would take out a forward contract to sell the underlying. 3. You would take out a spot contract to buy the underlying. 4. You would take out a forward contract to buy the underlying.arrow_forward
- D3) Finance Consider an option with α being a non-negative parameter and the option pays ((S(T))α − K)+ at maturity date T. Let Cα(S(0), σ, r) be the risk neutral price of the option (with interest rate r and volatility σ) when the initial price is S(0). Obviously, C1(S(0), σ, r) = C(S(0), σ, r) is the price of an ordinary call option. Show that, Cα(S(0), σ, r) = e(α−1)(r+ασ2/2)TC((S(0))α, ασ, rα), where rα = α(r − σ2/2) + α2σ2/2.arrow_forward1.) The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- the money by _____ pesos. 3.) What is the Intrinsic Valuearrow_forwarddiscussed that equity can be thought of as an option on the firm. If this is true, answer the following four questions: a) What type of option is it (i.e., the term that indicates what the option holder has the right to do)? b) Who sells (i.e., writes) the option? c) Who buys (i.e., holds) the option? d) What is the strike/exercise price?arrow_forward
- D3) Finance a) What does the option delta refer to? For a standard European put option, draw the graph of the delta as a function of the price of the underlying asset. b) You have delta hedged a long call position on a stock. The stock price drops. Explain how you would adjust your hedgearrow_forwardwhich one is correct please confirm? Q6: The price specified on an option that the holder can buy or sell the underlying asset is called the premium. call. strike price putarrow_forwardQuestion 1 (Mandatory) Which of the following equations calculates a put option's value? Os.et. N(d2) - K N(da) OK.ert. N(d2) - S. N(d) Os.e*t. N(-d2) - K N(-dg) OK.et.N(-d2)- S N(-d1) Question 2 (Mandatory) The forward price is determined at contract initiation but changes during the life of the forward contract. O True Falsearrow_forward
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