Answer:
a. A long position is a bet that the number is going to fall while a short position is a bet that the number will rise in the future.
Explanation:
The derivative contract is a contract in which the contract is to be done between two or more parties regarding the value i.e. depend upon the financial asset i.e. underlying. It involves the bonds, commodities, etc
So according to the given options, the option a is correct as long position is a bet in which the number is to be decline while on the other hand in the short position the number would increase
Answer:
$34.22
Explanation:
The computation is shown below:
Value of the stock = Next year dividend ÷ (Required rate of return - growth rate)
where,
Growth rate equal to
= {($0.76 ÷ $0.632)^1 ÷ 3} - 1
= 6.34%
And, Next year dividend would be
= $0.76 × (1 + 6.34%)
= $0.81
So, the value of the stock would equal to
= 0.81% ÷ (8.70% - 6.34%)
= $34.22
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Answer:
22.64%
Explanation:
Given that
Buyed value of an asset = $4,500
Projected cash flows
For year 1 = $750
For year 2 = $1,000
For year 3 = $850
For year 4 = $6,250
So, the rate of return i.e internal rate of return is
We assume the internal rate of return be X%
$4,500 = $750 ÷ (1.0x) + $1000 ÷ (1.0x)^2 +$850 ÷ (1.0x)^3 + $6,250 ÷ (1.0x)^4
After solving this, the rate of return is 22.64%
Answer: net operating income
Explanation:
