Financial Management - Study Mode
[#226] Current option price is added to present value of portfolio for calculating
Correct Answer
(B) current value of stock
Explanation
Solution: Current option price is added to present value of portfolio for calculating current value of stock.
[#227] In options pricing, an exercise price rises from lower to higher which leads to
Correct Answer
(C) option value decreases
Explanation
Solution: In options pricing, an exercise price rises from lower to higher which leads to option value decreases. Before venturing into the world of trading options, investors should have a good understanding of the factors determining the value of an option. These include the current stock price, the intrinsic value, time to expiration or the time value, volatility, interest rates, and cash dividends paid.
[#228] In stock option, a little chance exists for large gain on stock when price of stock
Correct Answer
(C) rarely moves
Explanation
Solution: In stock option, a little chance exists for large gain on stock when price of stock rarely moves. A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed upon price and date.
[#229] Document in a corporation which consists of amount of stock, name and addresses of directors is classified as
Correct Answer
(D) charter
Explanation
Solution: Document in a corporation which consists of amount of stock, name and addresses of directors is classified as charter. A charter plane or boat is one which is hired for use by a particular person or group and which is not part of a regular service.
[#230] A price for equity is called
Correct Answer
(B) cost of equity
Explanation
Solution: A price for equity is called cost of equity. The cost of equity is the return a company requires to decide if an investment meets capital return requirements.