Which is the better investment option?

Q: Why future value is important to calculate?

A: Future value is the value of what a certain asset/cash/instrument will be worth at a future…

Q: Is the project viable or not? Suggest reasons

A: The viability of a project is examined in a feasibility study to ascertain the likelihood of…

Q: What are the assumptions of efficient market hypothesis? Discuss.

A: The efficient market hypothesis (EMH) is a hypothesis theory which states that share prices reflect…

Q: For the ORI to be truly optimal, it must maximize present worth over the planning horizon. True or…

A: In this question, we are required to determine whether the statement is true or false.

Q: How widely used is real option analysis?

A: Real option analysis is the analysis of a company’s opportunity cost of an investment or a…

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: 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: Describe the Market-Value Analysis?

A: Market Value is a solid indicator of investor or shareholder capital. All things considered, what…

Q: Present and Explain the theories of the Yield Curve?

A: The yield curve is a curve that shows the relationship between the interest rates and the different…

Q: What factors verify that the project is marginally acceptable?

A: Capital budgeting decisions are generally taken for long-term purposes that are irrevocable.…

Q: What is the payback method? What are its main strengths and weaknesses?

A: Explain the meaning of the payback method.   The payback period is the expected time period which is…

Q: What is the difference between the possible returns and the expected return?

A:

Q: what are the sssumptions about market efficiency?

A: The theory that states that all the information available in the capital market is reflected in the…

Q: How is it possible to achieve a higher rate of return without significantlyincreasing risk?

A: As we all learnes till now that higher the risk provides higher return and if we want the high…

Q: What is the maximum value that a call can take? Why? Explain which option (i.e. put or call)…

A: Options are of 2 types:1) Call Option2) Put Option

Q: What is market efficiency? Differentiate between weak and semi strong form efficiency

A: Market efficiency is the ability of markets to process the information quickly and generate the…

Q: Why does riskiness increase with time?

A: Risk can be said as that difference that arises which arises on expected outcome or investment's…

Q: Which project has no rate of return?

A: Answer: IRR is a measure in capital budgeting used to measure the value of the predicted…

Q: What is the decision rule for payback?

A: Payback period is the period of time taken by the project to recover the investment in such project…

Q: payback period, NPV, and IRR always lead to the same decision? Why or why not? If not, which one…

A: Step 1   One of the most essential choices a business owner or management will ever make is capital…

Q: When does a project deny the merit consideration?

A: Project is assessed on the basis of various important considerations such as profitability, social…

Q: What is market efficiency?

A: Market Efficiency term is taken from a paper written by Eugena Fama in 18970. Fama acknowledges that…

Q: What impact does each of the followingparameters have on the value of a call option?(4) Risk-free…

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

Q: what are the assumptions about market efficiency ?

A: Market efficiency refers to the market situation where stock prices reflect all available &…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.