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What is the major difference in the obligation of one with a long position in a futures (or forward) contract in comparison to an options contract?Answer: A futures or forward contract is a vehicle for selling or buying a stated amount of foreign exchange at a stated price per unit at a fixed time in the future. Determine that if the long holds the contract to the delivery date, he pays the effectual contractual futures (or forward) price, consider whether it is an advantageous price in comparison to the spot price at the delivery date. By difference, an option is a contract providing the long the right to buy or sell a fixed quantity of an asset at a specified price at some time in the future, although not enforcing any obligation on him if the spot price is much more favorable as compared to the exercise price. Since the option owner does not have to exercise the option if it is to his disadvantage, the option has a price, or premium, while no price is paid at inception to enter into a futures (or forward) contract.
Stream of Expected Returns Investment returns can take many forms. An investor must consider all these forms to evaluate an investment option accurately. A brief description of
What is a sunk cost? Is it relevant when evaluating a proposed capital budgeting project? Explain. A sunk cost is a cash flow that has already takes placed, or that will take
What role does depreciation play in estimating incremental cash flows? Depreciation expense is a tax deductible expense and thus affects cash flow through its effect on taxes.
Fund Raising and Investment: Fund commitment requirement in Hedge Funds sometimes exceeds millions of dollars. In addition, high minimum investments are sometimes closed to new
Q. What do you mean by Treasury Bills? Treasury bills (TBs) are short-term government securities. The usual practice in India is to sell treasury bills at a discount and redeem
discuss the applicability
1. If Robinson wishes to maximize its total market value, would you recommend that it issue debt or equity to finance the land purchase? Explain. 2. Construct Robinson’s market va
Journal articles review reviewed
Q. Working Capital as a Percentage of Net Sales? This approach to estimate the working capital requirement is based on the fact that the working capital for any firm is directl
Product development A strategy which tends to increase sales by the development of new services or products to the same market for example an entirely new or improved existing
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