what happens If you would lose money by exercising an option immediately

Q: When I buy an option, I gain rights, but I also have obligations to the option seller. True Or…

A: Options are important financial derivatives widely used in financial markets.

Q: The time value of an option is equal to:

A: Option's market price = option's intrinsic value + Time value of option

Q: If a company has an option to abandon a project, would this tend to makethe company more or less…

A: Introduction: Abandonment option is referred as those investment opportunities that are left to the…

Q: What does the seller of a put option hope will happen?

A: An option contract indicates a contract that allows its buyer to buy or sell an underlying at the…

Q: Time value of American option represents the value of keeping option alive and waiting till a later…

A: Solution: Option premium comprises or two values: Intrinsic value and Time value.

Q: ue/ False There is a possibility of unlimited loss to put option buye

A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…

Q: One way to offset a higher probability of default would be to have high quality collateral thus…

A: Default refers to failure of an obligation that is generally related to repayment of a loan or funds…

Q: The maln rule In Investing Is: Select one: O a. don't invest unless the percelved risk is high…

A: Investor should consider various aspects before investing in any security or portfolio. Some of the…

Q: which one is true? for any type of option strategy, the payoffs will never be negative  for any type…

A: Option C is true.

Q: options contracts

A: An option contract illustrates a two-party agreement that authorises a transaction on a certain…

Q: What is the value of a call option or a put option if the stock price is zero? What if the stock…

A: The value of a call option or a put option is directly linked to the underlying asset's price, which…

Q: Choose which sentance is false.       A. When you own a call​ option, you have the right to buy the…

A: The option contracts are the derivative financial instruments that can be classified as the call…

Q: Which of the following is NOT true of options? I. The writer decides whether the option will be…

A: Call option gives holder a right to buy a stock, but it is not an obligation to buy the stock.…

Q: The buyer of the option is not obliged to complete the deal and will do so only if changes in price…

A: Option contracts are the contracts which gives the buyer the right to buy or sell the underlying…

Q: Why do you think crypto have negative impacts, but you still invest in crypto?

A: A cryptocurrency is a type of digital currency that is represented by a data string that is…

Q: Why are options being sold at prices higher than their strike value?

A: Option: An option is a special type of contract which gives its holder the right but not obligation…

Q: According to Peter Bernstein "When we take a risk, we are betting an outcome that will result from a…

A: Risks are the situations and conditions that have exposure to losses or damages. Risks expose…

Q: a) How can you create a bear spread using call options? How can you create a bear spread using put…

A: Options trading involves various strategies that traders can use to speculate on market movements or…

Q: Which of the following statements is​ FALSE?       A. You invest today only when the NPV…

A: The objective of the question is to identify the false statement among the given options related to…

Q: IF YOU WILL INVEST IN ONE OF THE INVESTMENT OPTIONS, WHAT WOULD IT BE AND WHY? ELABORATE YOUR ANSWER

A: Out of the investment options available, the expected return of equity is higher than other…

Q: Explain why the delta hedging of a negative gamma options position loses money.

A: Delta hedging is a technique used by traders to manage the risk associated with options positions.…

Q: To hedge, a user of an energy resource wants price protection from rising prices. The user decides…

A: Options are the derivative instrument that can be used by the investors to hedge their risk of loss.…

Q: What is the role played by the clearinghouse if you are seller of a put option

A: Clearing house is intermediary between buyers and sellers which collect payment from both sides and…

Q: discuss  the advanatages and disadvantages of options in the financial markets?

A: Advantages: The market is in fluctuation. In these circumstances the seller and buyer should use the…

Q: Options serve the same purpose as futures in that respect but are fundamentally different. How?

A: Options and futures are similar trading products that provide investors with the chance to make…

Q: 4 Who is more likely to profit from an option contract, the writer or the buyer?

A: A contract between the financial asset's seller and buyer, which allows the buyer to sell or buy the…

Q: A call option that is Multiple Choice in the money out of the money has a positive intrinsic value…

A: 1)In-the-money call option (ITM):The underlying asset may be purchased with a call option at a…

Q: We understand standard deviation of returns as a measure of risk and rational investors would like…

A: Option is a future right not an obligation to sell or buy the underlying asset or security at a…

Q: The major principles to remember when considering real options include all of the following EXCEPT:…

A: REAL OPTIONS: As the name suggest real options include all tangible assets such as plant and…

Q: Explain with examples how a firm can hedge its risks using options

A: Hedging : Hedging can be understood as the  technique for risk management used to mitigate…

Q: t is payoff to put option holder on expiry?

A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…

Q: In our study of Real Options, we learned about the many benifits of Real Options. Of the below,…

A: Real options refer to the strategic flexibility that decision-makers have in adapting to changing…

Q: What is the advantage and disadvantage of paying your employees stock option?

A: employee stock option plan is a plan that gives benefit to the employees ownership or shares in the…

Q: As a call option is an option to buy and a put option an option to sell, the opposite position to…

A: Options give the buyer the right to purchase the underlying asset but not the obligation to exercise…

Q: Without a financial market , purchasing a house would require a cash purchase . Choose options a .…

A: Financial Market is a market place where financial instruments are traded.