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American option is greater than European Option

AFM

answered 6 hrs ago

Hi sir, the question we solved is American put option(Abandonment option) and the value of the option is 52.7 million atleast.i will tell what i understood by the word "atleast" , please correct me if iam wrong. Normally BSM is used to compute European options value, here we used that even though it is an american option. So in European option value computing method i.e. BSM itself we are getting the option value as 52.7 million, in american option value computing method i.e. Binomial we will definitely get the option value more than 52.7 million. That's why we used "atleast"

latest answer

yes 100% right

B. Dinesh

B. Dinesh

CA Final

3K+

1

5

Dividend treatment in Black scholes formula

AFM

answered 8 hrs ago

Hi sir, in this question you said if there is a dividend it will get adjusted at two places i.e. In call option value formula at 'Spot' value and in d1 formula at 'r'. But in previous question no. 22 part 4, you said just to adjust the spot with PV of dividend and use the normal formula. by doing this we are giving the effect in Call option formula same as above. But the 2nd effect in d1 is not provided here na. Why is this sir ? Is it bcz its real options ?

latest answer

Ideally dividend should be adjusted at both places. ICAI has chosen to follow this weird method of adjusting dividend with spot in case of normal options and in both places in real options. They come up with their own explanations and interpretations

B. Dinesh

B. Dinesh

CA Final

3K+

1

4

Articleship

Others

answered 15 hrs ago

Sir/mam can I do articles in Pondicherry?? Sir can you please refer some audit firms for me??

latest answer

Thank you sir... Sir is it good to do articles in Pondicherry?

Sai Prasanna Ch

Sai Prasanna Ch

CA Inter

20K+

2

40

Orientation course

Others

answered 15 hrs ago

What are the things I want to take for orientation course

latest answer

Thanks for reply

SANTHOSH K

SANTHOSH K

CA Inter

18K+

3

28

INDAS 16 VS INDAS 40

Financial Reporting

answered 16 hrs ago

Here in Example, A ltd business is of renting out building. In such case, the building will be classified as PPE under Indas 16. Am I right? Then why has it been classified under INDAS 40?

latest answer

Check back the 1st video of INDAS 16. (Overview & Scope). Timing-15:00

Swathi S

Swathi S

CA Final

0

2

12

Hotel vs Restaurant Example

Financial Reporting

answered 19 hrs ago

In the Hotel vs Restaurant example, If the restaurants are given out on finance lease, then the asset will be derecognised in the books of lessor. Then how will it be classified under INDAS 40 as Investment property?

latest answer

Till it is let out, it will be classified under IP.

Swathi S

Swathi S

CA Final

0

1

14

Investment Property

Financial Reporting

answered 18 hrs ago

Case 1: There is a CA Academy. It rents out its building as hostel for the Students who are taking classes in their academy. Whether such building to be covered under INDAS 16 or INDAS 40? Case 2: There is a CA Academy. It rents out its building as hostel generally for all. (not only for its students).Whether such building to be covered under INDAS 16 or INDAS 40?

latest answer

The difference between 16 and 40 lies in the purpose of holding asset. If the building or part of the building is being used to earn rental income by giving it on rent, then it will be classified as Investment Property otherwise PPE.

Swathi S

Swathi S

CA Final

0

1

7

Negotiable instruments

Corporate & Other Laws

asked 21 hrs ago

hii can anyone tell me in negotiable instruments dishonour of cheque for insufficient of fund in the account and bouncing of cheque are same or different ?

latest answer

No answers yet!!

Vignesh s

Vignesh s

CA Foundation

3K+

0

11

Removal of auditor and rotation of auditor both are similar or different

Auditing

answered 1 day ago

For this question I soving this Q4a

latest answer

Removal is removal before the expiry of the term. Rotation is on completion of 5 years or 10 years as the case may be .

R G

R G

CA Inter

2K+

2

21

Regarding notes of newly added AFM Topics

AFM

answered 1 day ago

Hi sir, i have bought the classes in last year, so i got SFM book. In this book we are not having newly added AFM topics. So please provide the PDF from which you are teaching in the lectures. please provide notes for all the newly added topics.

latest answer

You can download from free resources section

B. Dinesh

B. Dinesh

CA Final

3K+

1

20

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