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Nutka1998 [239]
4 years ago
8

Which of the following is true of investors using options to manage​ risk? A. Investors can hedge against a price decline by buy

ing a call option. B. Investors can hedge against a price decline by buying a put option. C. Options suffer a loss if the value of the asset moves in the opposite direction of that being hedged against. D. Options are less expensive than other hedging devices.
Business
1 answer:
Virty [35]4 years ago
3 0

Answer:

A. Investors can hedge against a price decline by buying a call option.

Explanation: Investment risk can be defined as the probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Buying a call option entitles the buyer of the option the right to purchase the underlying futures contract at the strike price any time before the contract expires. Most traders buy call options because they believe a commodity market is going to move higher and they want to profit from that move.

A call option is a contract the gives an investor the right, but not the obligation, to buy a certain amount of shares of a security at a specified price at a later time.

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Evgesh-ka [11]

The difference between the monthly payment of R and S is equal to $48.53 by following the compound interest formula. Thus, Loan R's monthly loan amount is greater than Loan S.

<h3>What is a Compound interest loan?</h3>

Combined interest (or compound interest) is the loan interest or deposit calculated based on both the original interest and accrued interest from earlier periods.

\rm\,For\,R\\\\P = \$\,17,550\\r\,= 5.32\%\\Time\,= n= 7\,years\\Amount\,paid= [P(1+\dfrac{r}{100\times12})^{n\times12} ]\\=[ 17,550 (1+\dfrac{5.32}{100\times12})^{7\times12} ]\\= [ 17,550 (\dfrac{12.0532}{12})^{84} ]\\\\=  [ 17,550 (1.00443^{84} ]\\\\= \$ 25,440.48\\\\Total\,monthly\,payment = \rm\,\dfrac{25,440.48}{84}\\\\= \$\, $302.86\\\\

\rm\,For\,S =\\\\P=\,\$ 15,925\\r\,= 6.07\%\\T=n= 9\,years\\\\Amount\,paid\,= [P(1+\dfrac{r}{100\times12})^{n\times12} ]\\\\\= [15,925(1+\dfrac{0.0607}{12})^{9\times12} ]\\\\\\= [15,925(1+\dfrac{0.0607}{12})^{108} ]\\\\=[15,925(1.7247.84)} ]\\\\\= \$27,467.19\\\\Total\,monthly\,payment =\dfrac{\rm\,\$\,27,469.19}{108}\\\\= \$ 254.326\\\\

The difference between the monthly payment of R and S is equal to $48.53.

Hence, Loan R's monthly payment is greater than the loan's monthly payment by $48.53

To learn more about Compound interest, refer to the link:

brainly.com/question/14331235

5 0
2 years ago
According to the rule of 72, if you have $15,000 in an account that grows at the rate of 12 percent annually, it will take appro
yulyashka [42]

Answer:

true

Explanation:

7 0
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The competitive strategy should the company use based on these factors is the home replication strategy. In this strategy, there is a minimal need for flexibility or modifications.

Since the company finds weak pressure to respond to local demands and cost reductions are not necessary, then the home replication strategy is applicable.

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