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What is the Black-Scholes formula and how is it used in option pricing?
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- Assuming I have an option clearinghouse account through my broker, my strategy to make money through the option trading is all about doing offset at the right time, and getting profit from the difference between the option price paid and the option price received. Briefly Explain( using numbers of your choice if necessary)?What are the assumptions of Arbitrage Pricing Theory (APT) modelWhat Is E-Reverse Auctions?
- Define consideration. Can consideration be illegal for a binding contract? Can consideration be modified in a contract? Is that ethical?Who were the Bernoulli's and what was their contribution the expected utility theory (or decision theory more generally)?Back in 2007, William Beeny, the 81-year-old founder of a quirky roadside museum devoted to proving that Elvis Presley is still alive, put the museum's entire collection of Elvis memorabilia up for auction. The collection included photographs, books, yellowed news clippings, and replicas of Elvis' Cadillac. His wish was that the winning bidder would buy the collection and carry on his theory that the King never died. Beeny refused to put a value on his collection. "Value is in the eye of the beholder," he said. "One man's trash is another man's treasure." Suppose four individuals decided to participate in the auction and that their private values of the collection are as follows: Bidder Valuation Dimmy $147,000 Virginia $158,000 Burt $153,000 Hope $150,000 Which of the following statements is correct? O In a first-price sealed-bid auction, Virginia would win the collection but might end up paying more than $158,000 (winner's curse). O In an English Auction, Virginia would win the…
- Why might prospect theory-like behavior be rational? Why do many behavioral economists argue that such behavior irrational?Oftentimes, when somebody makes a purchase, it comes as a result of viewing an advertisement from a retailer. Here is an example of an advertisement from a car retailer: "Come on down to Toyota of Lancaster. We have one Toyota Corolla left for sale at $21,000 (VIN: 123456789)." State whether you believe the aforementioned quote from the advertisement would constitute an offer. If it is an offer, why? If not, why?Large airlines sometimes engage in fuel hedging as a way to avoid wild changes in jet fuel prices. To fuel hedge, an airline purchases a futures contract from an oil company that states they will purchase a set quantity of jet fuel at a specific price in the future regardless of what the actual market price is in the future. a. What do you expect to happen to the price of jet fuel in the future if the price of a fuel hedge decreases? Why?
- Which of the below statements DOES NOT FIT IN with what Wheelan wrote in In chapter 7, "Financial Markets," of the book Naked Economics? Making financial decisions based on emotions can result in bad financial decisions. Wheelan prescribes brain injury as a reliable investment strategy.Could you explain why option c is false? and where are differences between option c and d?Where is the Nash Equilbrium? * Marvel Comics MARVEL Jarvis Mandarin $300 $100 $200 $80 $50 $300 $500 $800 DC. DC chooses Alfred, Marvel chooses Jarvis O DC chooses Alfred, Marvel chooses Mandarin O DC chooses Joker, Marvel chooses Jarvis O DC chooses Joker, Marvel chooses Mandarin DC Comics Joker Alfred
