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Match List I with List II List I List II Hedging Concepts Description A. European option I. Option contract exercised on any date up to maturity B. Option premium II. When the immediate exercise of an option yields positive value to its holder C. In-money option III. Option contract exercised only on the maturity date D. American option IV. It is paid by the buyer of the options upfront to the option seller Choose the correct answer from the options given below:

Match List I with List II List I List II Hedging Concepts Description A. European option I. Option contract exercised on any date up to maturity B. Option premium II. When the immediate exercise of an option yields positive value to its holder C. In-money option III. Option contract exercised only on the maturity date D. American option IV. It is paid by the buyer of the options upfront to the option seller Choose the correct answer from the options given below: Correct Answer A ‐ lll, B ‐ lV, C ‐ ll, D ‐ l

the correct answer is A ‐ lll, B ‐ lV, C ‐ ll, D ‐ l.

  Hedging Concepts   Description
A. European option III. Option contract exercised only on the maturity date
B. Option premium IV. It is paid by the buyer of the options upfront to the option seller
C. In-money option II. When the immediate exercise of an option yields positive value to its holder
D. American option I. Option contract exercised on any date up to maturity

Key PointsHedging - By purchasing a second investment that you anticipate will perform in the opposite way, you can use the investment strategy known as hedging to offset a potential loss on the first one.

Important PointsEuropean option -  An option contract that only allows for the day of expiration for right exercise is known as a European option.

Option premium - The current market value of an option contract is known as an option premium. Thus, it is the money that the seller (writer) of an option contract receives from the opposite side. Premiums for in-the-money options are made up of intrinsic and extrinsic value.

In-money option- A call option that is in the money allows the holder to purchase the securities for less than its current market value. If a put option is in-the-money, it allows the holder to sell the security for a higher price than it is currently trading for.

American option - An American Option is a form of options contract (Call or Put) that allows the option holder to exercise the option whenever they choose prior to the expiration date. It enables the option holder to profit from the security or stock whenever it is advantageous to do so.

Related Questions

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Which of the statements is/are true?
1. American option allows the option buyer to exercise his rights at any point before the expiry date.
2. Under European options, the option buyer can exercise his right only on the date specified in the option and not before that.
The following two statements relate to financial derivatives. Choose the correct answer for statements being correct or incorrect.
Statement I When an option is allowed to be exercised only on the maturity date, it is called an American option.
Statement II If the option holder does not lose or gain whether he exercise his option or buys or sells the asset form the market, the option is said to be at-the-money.
Which of the following statements are correct. Answer using the given below:
(1) Ascertainment of goods for sale is done by buyer.
(2) Appropriation of goods for sale is done by seller.
(3) Distinction between ascertainment of goods and appropriation of goods that former involves lithe element of common intention between buyer and seller", whereas later can be a unilateral act by buyer.
(4) Property in goods does not pass to buyer till appropriation.
List I mentions the four valid means of knowledge as given by gotama while List II gives their description. Match List-I with List-II: List – I (Valid means of knowledge) List – II (Description) (A) Perception (I) Cognition which presupposes some other cognition (B) Inference (II) Knowledge of the relation between a word and its denotation (C) Comparison (III) Statement of a trustworthy person and consists in understanding its meaning (D) Verbal testimony (IV) Non-erroneous cognition produced by the interaction of sense organs with the objects Choose the correct answer from the options given below:
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Statement I It is a pre-condition of right of stoppage in transit that seller must have parted with possession of goods.
Statement II Unpaid seller can exercise his rights of resale when goods are in his possession.
Statement III Where property in goods has been passed to the buyer, seller can file a suit against buyer for recovery of price.
Which of the above statement(s) is/are true?
Match List I with List II List I List II Research concepts Description A. Hypothesis I. It is a statistical test that does not make Assumptions about the parameters B. Sample II. Device using which data are collected in Research C. Research tool III. A subset drawn from a larger set to represent it D. Non-parametric tests IV. A tentative statement indicating the relationship Between two or more than two variables   Choose the correct answer from the options given below:
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