Question portfolio insurance can be arranged in several, Ask an Expert

Finance

Question: Portfolio insurance can be arranged in several ways. An investor can purchase a call and a protective put to guard against a greater than expected decline in the value of the underlying security. An investor can also buy actual insurance that pays the investors if the investment does not result in an expected return. An investor can even buy insurance that will pay if an investment that the investor did not actually make does not result in the expected return. All of this is perfectly legal.

Why can an investor buy insurance on a risk that the investor does not actually have because the investor did not actually make the investment that is insured? Does this make any sense? Why, or why not?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92606809

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Question - alakazam corp began business on january 1 2016

Question - Alakazam Corp. began business on January 1, 2016. At December 31, 2016, it had a $4,500 balance in the Deferred Tax Liability account that pertains to property, plant, and equipment acquired during 2016 at a c ...

Consider a project to supply detroit with 28000 tons of

Consider a project to supply Detroit with 28,000 tons of machine screws annually for automobile production. You will need an initial $5,100,000 investment in threading equipment to get the project started; the project wi ...

Common stock versus warrant investment tom baldwin can

Common stock versus warrant investment Tom Baldwin can invest $6,300 in the common stock or the warrants of Lexington Life Insurance. The common stock is currently selling for $30 per share. Its warrants, which provide f ...

Bond valuation relationshipsthe 13-year 1000 par value

(Bond valuation? relationships) The 13?-year, ?$1,000 par value bonds of Waco Industries pay 8 percent interest annually. The market price of the bond is ?$1,085?, and the? market's required yield to maturity on a? compa ...

A 36-year maturity bond with par value 1000 makes

A 36-year maturity bond with par value $1,000 makes semiannual coupon payments at a coupon rate of 14%. What is the EQUIVALENT annual yield to maturity of the bond if the bond sells for $1,080? A 31-year maturity, 9.5% ...

A stock price is currently 20 and at the end of 3 months it

A stock price is currently $20, and at the end of 3 months it will increase or decrease by 10%. The risk free rate is 5% per year (continuous compounding). Assume that ST is the price at the end of 3 months. what is the ...

1 define organizational communication2 what interesting

1. Define organizational communication 2. What interesting about the subject of organizational communication

Question - you purchase a machine for 100000 such machine

Question - You purchase a machine for $100,000. Such machine has a 3-year MACRS classification. If the machine is sold at the end of the second year for $45,000, what are the after-tax proceeds from the sale, assuming yo ...

Suppose a firm pays total dividends of 1100000 out of net

Suppose a firm pays total dividends of $1,100,000 out of net income of $5.5 million. What would the firm's payout ratio be? (Round your answer to 2 decimal places.)

Common stock versus warrant investment tom baldwin can

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert

Finance

Related Questions in Basic Finance

Question - alakazam corp began business on january 1 2016

Consider a project to supply detroit with 28000 tons of

Common stock versus warrant investment tom baldwin can

Bond valuation relationshipsthe 13-year 1000 par value

A 36-year maturity bond with par value 1000 makes

A stock price is currently 20 and at the end of 3 months it

1 define organizational communication2 what interesting

Question - you purchase a machine for 100000 such machine

Suppose a firm pays total dividends of 1100000 out of net

Common stock versus warrant investment tom baldwin can

Ask Experts for help!!

Looking for Assignment Help?

Why might a bank avoid the use of interest rate swaps even

Describe the difference between zero coupon bonds and

Compute the present value of an annuity of 880 per year

Compute the present value of an 1150 payment made in ten

Compute the present value of an annuity of 699 per year

Follow Us