Explain arbitrage risk free arguments, Financial Management

The current market value of any real or financial assets is the present value of the cash flows accruing to that asset discounted by a market determined risk-adjusted required rate of return, with exception for options which are priced via no arbitrage risk-free arguments.  In no more than 250 words, explain what this means.  Using one or more of our present value formulas would be very helpful. Also, do not worry about the option part.

Posted Date: 3/21/2013 6:16:29 AM | Location : United States







Related Discussions:- Explain arbitrage risk free arguments, Assignment Help, Ask Question on Explain arbitrage risk free arguments, Get Answer, Expert's Help, Explain arbitrage risk free arguments Discussions

Write discussion on Explain arbitrage risk free arguments
Your posts are moderated
Related Questions

how control the steps

Determine the Amount of financing required   The last factor determining company's cost of funds is the amount of financing required, where cost of capital increases as the fin

Comment on the subsequent statement: “Since the U.S. imports more than it exports, it is essential for the U.S. to import capital from foreign countries to finance its current acco

Dividends and interest payments Payment  of  dividends  and  interest  can  either  be  demonstrated under financing activities or  under operating activities. Sum of the 3

You know that Treasury bills have a beta of 0 because they are risk-free.  A portfolio of technology stocks has a beta of 3.  You plan to invest 40% of your investment capital in T

To evaluate a company using enterprise discounted cash flow (DCF), we discount free cash flow by the weighted average cost of capital (WACC). The weighted average cost of capital r

Q. Define the finance function? Is it a risk-return trade off? What is the basic role of a modern financial manager? What is the basic importance of finance function in the mana

Decentralization This is a company power structure in which authority and decision-making responsibility are diffused throughout various stages of an organization. Decentraliz

Advantages of ARR: It is simple to calculate and easy to catch. With the help of this technique, direct comparisons among proposed projected of varying lives with no bu