The value of European Put option is 9.
<h3>What is Put option?</h3>
Under derivative securities market an option whose value depend on the underlying item where delivery is not made generally & net settlement done by squaring off the position and depends on the volatility of market.
Put Option is a bearish school of thought where investor thinks the market will decline & the value will be below the exercise price.
In hedging the position of investor make certain not better, therefore the value of put option lies between zero or difference value among the spot price & exercise price with discounting annual market interest rate:
Spot = 70
Exercise = 65
Future Price = 70 × 80% = 56
Rate = 4 % Compounded semi annually.
Value of Put = Spot Price - Exercise Price
= 56 - 65
= 9
Thus the value of put option will be 9 (65-56).
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If the interest rates on all bonds rise from 5 to 6 percent over the course of the year, a bond with one year to maturity would be preferred to have been holding.
A bond is a debt instrument similar to a promissory note. Borrowers issue bonds to raise money from investors who lend them money for a period of time. When you buy a bond, you are lending it to the issuer, which can be a government, community, or corporation.
Simply put, a bond is a loan from an investor to a borrower, such as a corporation or government. Borrowers use the money to fund their businesses, and investors earn interest on their investments. The market value of bonds can change over time.
Bonds are issued when governments and companies want to raise money. By purchasing a bond, you are providing a loan to the issuer, who agrees to repay the face value of the loan by a specified date and pay periodic interest, usually twice a year pay.
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Answer: Reduction of imports will move spending on another national output to spending on domestic output
Explanation:
Artificial tree barrier such as tariff and import quotas reduce unemployment in one US industry and has another industry increase it's productivity due to this effect. Reduction of imports will move spending on another national output to spending on domestic output, this would cause the domestic output and employment to rise
Answer:
B) adaptive
Explanation:
Based on the scenario being described it can be said that this form of expectations formation is known as adaptive expectations. These are expectations formed from a process in which individuals predict what will most likely occur in the future based on the data of what has already happened in the past.
