Stock option price-Strike price-Put and Call
What do you mean by the following terms: a stock option price, strike price and what are a put and a call?What is the merits or demerits of purchasing stock options over stocks? What function do Mutual Funds execute with Stock Market investments?
Expert
A stock option offers an employee the right to buy a certain number of his/her company shares at some future date and at the specific price already decided by the employer. This specified price is referred to as the stock option price and may be mostly the current price while issuing the stock option. Similarly, an option offers an investor the right to buy or sell but not an obligation and the specified price at which the investor can buy or sell shares is referred to as the strike price. A call option offers the right to buy and a put option offers the right to sell shares at the strike price within a specified time period.
The advantages of options over stocks include (1) leverage over a stock without any obligation, (2) cheaper per share, (3) limited risk and (4) protection against stock volatility.
The disadvantages include (1) higher cost of trading, (2) complex to understand and needs a keen eye, (3) subject to time-sensitivity and (4) some positions have unlimited risk. Of the many methods to trade in a stock market, mutual funds play an important role, since they include a portfolio of stocks managed by an expert fund manager and hence investors need not invest more time and efforts in choosing the specific stocks as when done individually. Thus mutual funds lower the risks, investment amount and the time that an investor spends but offers good profits.
Question: What can we learn from the Japanese experience? Is the US headed for a 'lost decade? Answer: There was a similari
Cite examples of recent decisions that you made in which you, at least implicitly, weighed marginal cost and marginal benefit?
What stage of the business cycle is our economy experiencing at present time? proof your answer.
Assume that you consume bananas and apples, and the marginal utility of the last apple consumed is 6 times the marginal utility of last banana consumed. Though, the price of apples is only 3 times the price of bananas. This disequilibrium among the two goods can be re
Explain the term Shut Down Price? Illustrate it.
Question: This assignment in Economics, deals with macro-economics. An essay on Market imperfection associated with negative externalities. According to Economics, perfect markets would require an "invisible hand" to allocate all the resources to be a
Explain evaluation of net present value (NPV) and internal rate of return (IRR) in brief?
Ideas in which organization is involved: Talking about the growth of any company. There are basically three type of broad ideas in which management of any organization is involved. These are: 1. Corporate Strategy<
DISCUSS the experience of high GNP countries and low GNP with regard to PQLI.
Economists agree that inflation beyond a moderate rate is undesirable as it can often prove disastrous and therefore, it must be kept under control. Economists agree also that an appropriate mix of fiscal and monetary policies can be helpful in controlling inflation.
18,76,764
1958851 Asked
3,689
Active Tutors
1423763
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!