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Helen [10]
3 years ago
13

Suppose that instead of using a forward contract, you consider using options. A one-year call option to buy euros at a strike pr

ice of $1.25/€ is trading for $0.10/€. Similarly a one year put option to sell euros at a strike price of $1.25/€ is trading for $0.10/€. To hedge the risk of your profits, should you buy or sell the call or the put?
Business
1 answer:
Stells [14]3 years ago
5 0

Answer:

Sell the put option. The put option is better and advantageous .

Explanation:

The call option is trading far below the strike price and poses risk. The price may not go up to $1.25 and hence not advisable. The put option is better as we stand to make a profit margin ($1.15 / Euro) if it sells the put at he strike price immediately. Given that the difference is high, it is unlikely that the price will move against us and we shall exercise the option as soon as the margin starts reducing.

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telo118 [61]

Answer:

a) targeting.

Explanation:

Targeting -

It refers to the marketing strategy , where some selected or specific type of people are targeted to market the goods and service produced , is referred to as targeting .

In the process of targeting , the people are distributed according to some specific characteristics .

Hence , from the given scenario of the question,

The correct option is a) targeting .

3 0
3 years ago
José is afraid to ask Tina on a date because he fears she will say no. José is experiencing
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Peter, the owner of Happy Burger, is involved in the company's daily decisions and has established procedures for every task. Th
ohaa [14]

Answer:

mechanistic

Explanation:

Mechanistic organization is the organization that is hierarchical and bureaucratic

It is characterized by its;

  1.  Highly centralized authority.
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Mechanistic organizations work well in stable, simple environments. Managers integrate the activities of clearly defined departments through formal channels and in formal meetings. Often, they feature many hierarchical layers and a focus on reporting relationships.

6 0
3 years ago
The ________ of the term structure states the following: the interest rate on a long-term bond will equal an average of short-te
rjkz [21]

Answer:

liquidity premium theory

Explanation:

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It should be noted that The liquidity premium theory of the term structure states the following: the interest rate on a long-term bond will equal an average of short-term interest rates expected to occur over the life of the long-term bond plus a term premium that responds to supply and demand conditions for that bond.

7 0
2 years ago
Based on the pure expectations theory, is the following statement true or false?
Annette [7]

Answer:

The correct answer is letter "B": False.

Explanation:

The Pure Expectations Theory uses long-term interest rates to predict future interest rates in the short run. Investors consider different investments to predict future interest rates. In the example, the statement indicates the opposite. It is taking a short-term interest rate (one-year bond), to calculate the return of a long-term investment (five-year bond).

5 0
3 years ago
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