Financial Management - Study Mode

[#761] Present value of portfolio is Rs 1300 and current value of stock in portfolio is Rs 2300 then current option price will be
Correct Answer

(B) Rs 1,000.00

Explanation

Solution: Current option price = Current value of stock - Present value of portfolio = Rs. 2300 - Rs. 1300 = Rs. 1000.

[#762] An investor who buys shares and writes a call option on stock is classified as
Correct Answer

(C) hedger

Explanation

Solution: An investor who buys shares and writes a call option on stock is classified as hedger. A commercial hedger is an organization which uses futures contracts to lock in the price of specific commodities it uses in running its business.

[#763] Value of stock is Rs 1000 and current value of portfolio is Rs 1500 then obligation to cover call option will be
Correct Answer

(D) Rs 500.00

Explanation

Solution: Obligation to cover call = Current value of portfolio - Value of stock = Rs. 1500 - Rs. 1000 = Re. 500.

[#764] Factoring is a form of financing.
Correct Answer

(B) receivables

Explanation

Solution: Factoring is a form of receivables financing. Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount.

[#765] The relevant risk for a well-diversified portfolio is____________.
Correct Answer

(D) market risk

Explanation

Solution: The relevant risk for a well-diversified portfolio is market risk. Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved.