Answer:
The financial securities would decline by $106.7
Explanation:
Given
Financial securities at a geometric rate= $128
Underlying Security Asset = $14
Decreased value of the underlying asset = $6
When there's a reduction of $6 in the underlying asset price, this means the securities value will also get a reduction by a ratio of 6.
Because of this, we'll only consider the financial securities because it increases at a geometric progression unlike underlying assets that increases by arithmetic progression.
First, the value of financial securities needs to be calculated using the following formula;.
Value of Financial Securities = Financial securities at a geometric rate ÷
Decreased value of the underlying asset
Value of Financial Securities = $128 ÷ 6
Value of Financial Securities = $21.3
Tthe decline value of the financial securities is calculated as follows:
Decline Value = Financial securities at a geometric rate - Value of Financial Securities
Decline Value = $128 - $21.3
Decline Value = $106.7
Hence, the financial securities would decline by $106.7
