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

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: What is Scenario Analysis?

A: Scenario analysis is an important step in the financial modelling. This is used to show the possible…

Q: What exactly are ESOPs? What are some of its benefits and drawbacks?

A: Introduction: ESOP: Employee stock ownership plan is retirement plans for employees of the company…

Q: What assumptions underlie the EOQ model?

A: The model that helps in calculating the optimal amount of quantity needs to be purchase for…

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: Discuss the different variables of CAPM. What are the benefits and limitations of the CAPM?

A:

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: What is the SML? What is the CAPM? What is the APT?

A: Security Market Line (SML):The Security Market Line (SML) is a graphical representation of the…

Q: In a qualitative analysis, what factors affect the value of a real option?

A: An alternate choice that is accessible to the organization's managers taking investment…

Q: Describe the assumptions underlying CVP analysis?

A: Cost-Volume-Profit Analysis (CVP Analysis): CVP Analysis is a tool of cost accounting that measures…

Q: Define variable consideration.

A: Variable considerations: Contracts having a degree of variability in the specified transaction…

Q: Define net realization value?

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

Q: What are the advantages and disadvantages of  LIFO?

A: Last-in-First-Out: In Last-in-First Out method, the costs of last purchased items are considered as…

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: Options have a unique set of terminology. Define the following terms: (11) In-the-money call

A: The term "In the money" (ITM) relates to an option that has inherent value.

Q: Is the accept-or-reject decision rule the same as in the simple -investment case? Explain how?

A: Yes, accept or reject decision rule is the same as in the simple investment because accept or reject…

Q: Explain put option

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

Q: Distinguish between risk and return and briefly describe the relationship that exists between them.

A: Risk: It is the potential loss of an investor for investing in financial security based on his loss…

Q: What key assumption underlies the pure expectations theory?

A: Pure expectations theory in finance refers to the fact that the forward rates are nothing but the…

Q: What are the CVP assumptions?

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: What are the assumptions of Walter’s model?

A: The Walter Model of Careers is an influential theory in the field of career development. This model…

Q: What is forward points?

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

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: Options have a unique set of terminology. Define the following terms: (9) Covered option

A: An agreement where the holder has a right to purchase or sell the shares at a specific price at a…

Q: at is the initial value in part a ??

A: In forward and futures the price calculations are done based on the future cash flow from the stock…

Q: Explain title Mechanics’ Liens?

A: Lien is a right of posession of an asset; in case, debts are not discharged by the owner of the…

Q: Explain meaning the Net Present Value. - Why need to use NPV? - Give practical example on NPV.

A: Net present value is quite frequently used in capital budgeting decisions and quite helpful in…

Q: Options have a unique set of terminology. Define the following terms: (8) Writing an option

A: Options refer to the financial contract between the buyer and seller, which gives the buyer the…

Q: Identify the following terms: PV, E

A: PV (Planned value) : This can be understood as the first step in managing gained value. The accepted…

Q: What are those factors? Which is most AND least significant?

A: Following are the factors that affect option contract: Underlying Price Strike Price Time to…

Q: What is CAPM? What is ‘Alpha’ and ‘Beta’ in CAPM?

A: CAPM - CAPM model means the Capital asset pricing model. It describes the relational ship between…