. The cash flow of a long stock and long put strategy is equal to the cash flow from a long call strategy. True or False can i also get some explantation ple
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. The cash flow of a long stock and long put strategy is equal to the cash flow from a long call strategy. True or False
can i also get some explantation please?
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- Derive CAPM and explain the concept of systematic risk. Explain the notion of geometric Brownian motion and hence derive Ito’s lemma. Narrate how inflation impacts present value of cash flow. What do you mean by ‘beauty contest’ and discuss its impact on investment decision of investors in stock market.i) Calculate the expected return for each stock assuming the Capital Asset Pricing Model (CAPM) is valid, and explain if they are correctly priced. Show your calculations.The objective function of an investor in a CAPM world is to what (mathematically) [what are your trying to maximize]? What is the major assumption about the distribution of returns that we have to make to get to this objective function?
- What is the CAPM beta? How is it different from Cash Flow beta? Provide intuitive explanation and formulae for both.Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash flow profile are moved forward to t = n using what value of i in the (F|P,i,n–t) factors? a. 0 b. The unknown value of ERR (i′) c. MARR d. IRR.Solve soon i will give u 2 like sure Investors are most likely to use what type of valuation across a variety of different securities? a. Discounted Cash Flow Model b. Residual Operating Income Model c. Dividend Discount Model
- What is the difference between CAPM beta and cash-flow beta (from certainty equivalency approach)? Thank you!What options does a firm have to spend its free cash flow (after it has satisfied all interest obligations)? (Select the best choice below.) A. Use it to repurchase shares. B. Pay it out as dividends. C. Use it to make investments. D. All of the above.Assuming that the required rate of return is determined by the CAPM, explain how you would usethe dividend growth model to estimate the pricefor Stock i. Indicate what data you would need,and give an example of a “reasonable” value foreach data input. How would this be differentif you used free cash flows as the basis for yourevaluation?
- What does standard deviation measure? A. The holding period B. The gain on the investment C. Risk D. The amount of dividend #####################can you draw a profit diagram of the portfolio above and state any assumptions that must be made. Also, is the cost of the portfolio positive?Firm A generates more cash flow while taking less risk than Firm B. The stock price of Firm A should be higher than the stock price of Firm B. O True O False
