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Answer Posted / gangadhar
A secret reserve is created by the following methods:
1. By under valuation of assets much below their cost or
market value, such as investment, stock in trade, etc.
2. By not writing up the value of an asset, the price of
which has permanently gone up.
3. By creating excessive reserve for bad and doubtful debts
or discount on sundry debtors.
4. By providing, excessive depreciation on fixed assets.
5. By writing down goodwill to a nominal value.
6. By omitting some of the assets altogether from balance
sheet.
7. By changing capital expenditure to revenue account and
thus showing the value of assets to be less than their
actual value.
8. By overvaluing the liabilities.
9. By the inclusion of fictitious liabilities.
10. By showing contingent liabilities as actual liabilities
| Is This Answer Correct ? | 35 Yes | 2 No |
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Read the case carefully and answer the questions given at the end: CALLS PUT A B C Months of expiration 3 9 3 Continuous yearly risk-free Rate (Rf) 10% 10% 10% Discrete yearly Rf 10.52% 10.52% 10.52% Standard deviation of Stock returns 40% 40% 40% Exercise price Rs.55 Rs.55 Rs.55 Option price Rs.2.56 - Rs.6.20 Stock price Rs.50 Rs.50 Rs.50 Cash Dividend Re.0 Re.0 Re.0 1) Why should call B sell for more than call A? 2) Is the put call parity model working for options A&C? 3) Calculate the Black Scholes values of call A & Call B?
Explain what is Net Asset Value (NAV)?
