1. if a security is underpriced (i.e., intrinsic value > price), then

QUESTION

1. if a security is underpriced (i.e., intrinsic value > price), then what is the relationship between its market capitalization rate and its expected rate of return2. Why do you think the most actively traded options tend to be the ones that are near the money
1. if a security is underpriced (i.e., intrinsic value > price), then what is the relationship between its market capitalization rate and its expected rate of return Market capitalization rate is lower than its expected rate of return 2. Why do you think the most actively traded options tend to be the ones that are near the money If a traded option is near the money, its most likely to retain

and maintain its value. The is important for the simple reason that traders like all people want to minimize risk while maximizing profits (“gain”). “Near the money” options accomplish this be serving as typically stable, safe, and ultimately profitable options.

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