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timofeeve [1]
3 years ago
12

The time value of a call option is I) the difference between the option's price and the value it would have if it were expiring

immediately. II) the same as the present value of the option's expected future cash flows. III) the difference between the option's price and its expected future value. IV) different from the usual time value of money concept.
Business
2 answers:
Dima020 [189]3 years ago
5 0

Answer:

I) The difference between the option's price and the value it would have if it were expiring immediately

Explanation:

Time value simply means the option's premium portion that is accountable to the amount of time remaining until the option contract expires.

These is the difference between the option's price and the value it would have if it were expiring immediately.

Time value is the premium amount that the those investing is desire to pay more than the intrinsic value.

Time value can be calculated using below formula;

Time Value = Options Premium - Intrinsic Value.

Call options helps to purchase shares of stock at a stable price until the expiration date.

The intrinsic value and the time value are the two areas of call option. These intrinsic value and time value helps to know when to buy the underlying stock.

However time value of the option increases with with the time remains untill expiration

Nat2105 [25]3 years ago
4 0

Answer:

I) The difference between the option's price and the value it would have if it were expiring immediately

Explanation:

Time value in options trading simply refers to the part of an option's premium (cost or price) which is attributed to the amount of the time remaining until expiration.

An addition of the option's time value and intrinsic value equals the total premium of an option.

Therefore, we can mathematically state that:

Time Value = Option Premuim(Price) - Intrinsic Value.

The Option Premuim is an amount of money known as the price or cost.

In an exchange for the right granted by the option, an option buyer pays for the premium to an option seller.

Generally, it is seen that the more time that remains until the expiration, the greater the time value of the option. This happens as a result of investors willing to pay a higher premium for more time since the longer time taken to execute contract will be profitable due to a favorable move in the underlying asset.

Also, the lesser time remaining on an option will result in lesser willingness of investors to pay because the probability for profitability is slim.

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Michael has written an e-mail to his employees that describes a new product special that will be introduced to the
svet-max [94.6K]

Answer:

effective communication

Explanation:

Since Michael is communicating a very important message, it is essential for it to be effectively communicated. This is a crucial step related to making sure your message is structured, organized and easy to comprehend. Especially, it is important in messages like this one - introduction of new concepts/products, instructions to employees...

Effective communication is needed to avoid any potential misconceptions and  consequences related to a badly interpreted message.

3 0
3 years ago
Read 2 more answers
XYZ Corporation has declared a rights offering to stockholders of record on Wednesday, November 15th. Under the offer, sharehold
Kamila [148]

Answer:

The customer can buy 40 shares at $960.

Explanation:

Step 1: The number of shares the customer can buy can be calculate as follows:

NSCB = NSOC ÷ NSNS ......................................... (1)

Where;

NSCB = Number of shares a customer can buy = ?

NSOC = Number of shares owned by the customer = 200

NSNS = Number of shares needed to subscribe to one new share  = 5

Substituting the values into equation (1), we have:

NSCB = 200 ÷ 5 = 40 shares

Therefore, The number of shares the customer can buy is 40 shares.

Step 2: The amount to pay for the number of shares the customer can buy can be calculated as follows:

ANSCB = NSCB × PNS .............................. (2)

Where;

ANSCB = Amount to pay for the number of shares the customer can buy = ?

NSCB = Number of shares a customer can buy = 40

PNS = Price of the new share  = $24

Substituting the values into equation (2), we have:

ANSCB = 40 × 24 = $960

Therefore, the customer can buy 40 shares at $960.

6 0
3 years ago
Just-in-time management could be best defined in which of the following ways?Select one of the options below as your answer. A.
Tema [17]
The correct answer is D. decreasing inventory to lower costs

If you decrease inventory, then you don't have trapped money. If someone needs something, you can then order the things you need from your supplier and then sell it to the people who ordered it.
7 0
3 years ago
A company, which is currently operating at full capacity, has sales of $2,480, current assets of $820, current liabilities of $5
forsale [732]

Answer:

$61.60

Explanation:

Equity funding need =  Projected assets - Projected liabilities - Current equity - Projected increase in retained earnings

Equity funding need = $2,739 - $561 -  $1,980 - $136.40

Equity funding need = $61.60

<u>Workings</u>

Projected assets = (Current assets + Fixed assets) * 1.10 = 820+1,670 * 1.10 = $2,739

Projected liabilities = Current liabilities * 1.10 = 510 * 1.10 = $561

Current equity = Current assets + Fixed assets - Current liabilities = 820 + 1,670 - 510 = $1,980

Projected increase in retained earnings  = Sales*5% * 1.10 = $2,480*5% * 1.10 = 124*1.10 = $136.40

5 0
3 years ago
The Bradford Company issued 12% bonds, dated January 1, with a face amount of $87 million on January 1, 2021. The bonds mature o
kakasveta [241]

Answer:

1. $77,783,220

2. Jan-21

Dr Cash $ $77,783,220

Dr Discount On Bond $9,216,780

Cr Bond Payable $ $87,000,000

Explanation:

1. Calculation to Determine the price of the bonds at January 1, 2021.

First step is to calculate the Present Value Of Annual Interest

a Semi-annual Interest Amount $5,220,000

($87,000,000*12%/2)

b PV Annuity Factor for (20 Years,14%/2=7%) 10.5940

c Present Value Of Annual Interest (a*b) $ $55,300,680

($5,220,000*10.5940)

Second step is to calculate Present Value Of Redemption Amount

a Redemption Value $ $87,000,000

b PV Factor Of (20 Years,7%) 0.25842

c Present Value Of Redemption Amount (a*b) $ $22,482,540

($87,000,000*0.25842 )

Now let Determine the price of the bonds at January 1, 2021.

Intrinsic Value ( Price ) Of The Bond = ($55,300,680+$22,482,540)

Intrinsic Value ( Price ) Of The Bond =$77,783,220

Therefore the price of the bonds at January 1, 2021 is $77,783,220

2. Preparation of the journal entries to record their issuance by The Bradford Company on January 1, 2021,

Jan-21

Dr Cash $ $77,783,220

Dr Discount On Bond $9,216,780

($87,000,000-$77,783,220)

Cr Bond Payable $ $87,000,000

(Being to record issuance of bond)

3. Preparation of the journal entries to record their issuance by The Bradford Company on ion June 30, 2021

Jun-30

Dr Interest expenses $ 53,82,240

Discount On Bond payable $ 2,22,240

Cash $5,220,000

4.Preparation of the journal entries to record their issuance by The Bradford Company on

December 31, 2021

Dec-31 Interest expenses $ 53,97,797

Discount On Bond payable $ 2,37,797

Cash $5,220,000

( to record interest payment)

6 0
3 years ago
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