Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. Long and short dated volatility?
1. If an investor purchase long-dated volatility as well as sells short-dated volatility then the investor is expecting a decrease in the short dated volatility and an increase in the long dated volatility.
Obviously there is no guarantee that these expectations will be realized. If short run volatility goes up or else and long run volatility decreases the pay off from the position would definitely be negative.
This is equal to an investor constructing a short straddle position by using knock-out options. Long straddle may be constructed by utilizing options which have break-out clause to put a limit to unrestricted risk of loss that arises from the short (straddle) position in the short run.
If short dated volatility turns out to be high an additional premium is able to be triggered on the options which are used for the long straddle.
This added payoff from the long volatility position off sets the losses from the short volatility position.
3. The applicable payoff function will shift upwards by the amount of the additional payoff.
4. If the added premium is a fixed amount this may cut potential losses yet it mayn't be sufficient enough. Nevertheless considering that the short position is taken for one month this risk mayn't be a very big risk.
5. It is understandable from the text that volatility positions taken by using the straddles are not pure volatility positions.
Q. What is Deposit Method? Deposit Method - Related to sales of real estate, under this method seller doesn't recognize any profits, doesn't record a note RECEIVABLE and contin
What is the annual tax shield to a firm that has total assets of $80 million and a net worth of $55 million, if the average interest rate on debt is 8.5% and the marginal tax rate
ABC Ltd. Produces electronic components with a selling price per of Rs.100. Fixed cost amount to Rs.2,00,000/- 5000 units are produced and sold each year. Annua
Q. Aggressive Approach of financial management? A -firm may be aggressive in financing its assets. An aggressive policy is said to be followed by the firm when it uses short-te
john has two options from which to choose one: (a)Either to pay shs24m for the motor vehicle now . OR (b)To pay for the car in four equal regular installments of shs7m ea
The dividend is the part of the net income that the company distributes to shareholders. As the dividend represents real money, the net income is also real money. Is that true?
Q. Importance of Capital Budgeting Decision? 1. Such Decision affect the profitability of the Firm: - Capital Budgeting decision influences the long-term profitability of a fir
Why do investors invest the lion’s share of their funds in domestic securities? Answer: Investors invest greatly in their domestic securities since there are major barriers to in
what are the limitations of using projected data
discuss the applicability of operating cycle and any other financial knowledge to poultry business in uganda
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd