Why must real options have positive​ value? ​(Select all the choices that​ apply.)     A. Having the real option but not the obligation to act is valuable.   B. Real options must have positive value because they can always be sold to recover the initial investment.   C. Real options must have positive value because they are only exercised when doing so would increase the value of the investment.   D.

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

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

Q: All things remaining equal, a risk averse investor who is less risk tolerant would prefer an…

A: Risk Averse Investors are the investors which prefers to earn less returns with known risk or low…

Q: A person invests $50,000 in an investment that earns 6 percent. If $6,340 is withdrawn each year,…

A: Given: Present value = $50,000 Interest rate = 6% Amount = $6,340

Q: Hello, I having trouble getting the right answer for Option B "net present value," and the…

A: Internal rate of return refers to the discount rate at which the net present value of the investment…

Q: An abnormal return occurs:   Only when the actual return is lower than the expected return. Only…

A: A market is said to be efficient, if intrinsic Value of the Security is equal to Market price of 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: Explain the concept of “buy term and invest the difference (BTID).” a. Include in your explanation…

A: The buy term and invest the difference (BTID) refers to the actual amount that is needed to buy the…

Q: My question is for a synthetic call option why do we need to borrow the present value of the strike…

A: Synthetic calls and synthetic puts are the two types of synthetic options available. Both forms of…

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: Which of the following is a true statement regarding the future worth of a single investment…

A: Introduction: This question is related to the concept of time value of money. The time value of…

Q: Which of the following is a TRUE statement? ○ The separation theorem states that the investment…

A: The statement which is true is (d) The new(or super) efficient frontier represents the portfolios…

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: True or False

A: The question is asking whether an increase in volatility would increase the cost of an options…

Q: You might want to sell an option to prevent further losses if its market price is dropping. True…

A: Selling an option to prevent further losses when its market price is dropping is not a good…

Q: 2) Which of the following statements is FALSE? A) The option buyer, also called the option holder,…

A: Option is a derivative contract which allows the buyer of the option a right to buy or sell the…

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: 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: statement

A: Real options are options which provides the management with the rights to make certain business…

Q: Select all that are true with respect to real options. Out-of-the-money real options have value.…

A: The objective of the question is to identify the true statements about real options. Real options…

Q: Let rf be the risk free rate of interest. E[r e ] be the expected return of some risky asset.…

A: CAPM: CAPM is also called as Capital assets pricing model. Factors affecting CAPM return are risk…

Q: If the underling is a liability rather than an asset, then the strike price of the option should be…

A: The option is a financial security since a buyer can purchase the right rather than the obligation…

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: If you observe open interest is increasing and prices are moving higher, which of the following…

A: Technical analysis is the technique that tries to predict future movements of the market by studying…

Q: Options can be risky because it's a leveraged strategy.   True or False

A: Option are very good way to hedge the market and earn unlimited profit on that.

Q: basic economics can give us the sniff test. It provides us with a basic set of rules to which any…

A: Decent Investment:- A decent investment is a long term financial investment that satisfy your needs.…

Q: Which of the below statements is false about real options?  A. Real options increase firm value…

A: Real options are also such options which will be providing various types of opportunities for…

Q: Consider the following statement: “In contexts of increased uncertainty, the usefulness of real…

A: A real option allows a company's executives the option, but not the responsibility, to pursue…

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: Market efficiency requires: all investors are rational all the time. all investors…

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