MATH 5034 – Investments Review Questions 1. Consider a portfolio that offers an expected rate of return of 12% and a standard deviation of 18%. T-bills offer a risk-free 7% rate of return. What is the maximum level of risk aversion for which the risky portfolio is still preferred to bills? You may use the following utility function: U Er 0.005 A 2 . 2. The optimal proportion of the risky asset in the complete portfolio is given by the 2 equation y* = (E[rP] rf) / (.01A P ). For
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Definition of ’Market Indicators’ A series of technical indicators used by traders to predict the direction of the major financial indexes. Most market indicators are created by analyzing the number of companies that have reached new highs relative to the number that created new lows‚ also known as market breadth. What is active management? Actively managed investment funds are‚ like their namesake‚ run by a professional fund manager or investment research team‚ who make all the investment decisions
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The six forms of deferred (stock) compensation include: Incentive stock options‚ Non-statutory stock options‚ Restricted stock‚ Phantom stock plans‚ Discount stock options‚ and Stock appreciation rights. Incentive stock options entitle executives to purchase their companies’ stock in the future at a predetermined price. Compared to incentive stock options‚ non-statutory stock options do not qualify for favorable tax treatment. Executives’ pay income taxes on the difference between the discounted
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at a spot price of $63. $60 - $63 = ($3). $3 loss Question 2. The price of a stock is $36 and the price of a three-month call option on the stock with a strike price of $36 is $3.60. Suppose a trader has $3‚600 to invest and is trying to choose between buying 1‚000 options and 100 shares of stock. How high does the stock price have to rise for an investment in options to lead to the same profit as an investment in the stock? Answer: Let x = stock price. (x – 36)100 = (x – 3.6)1‚000 – 3‚600
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pull into the driveway. When I peeked out the window‚ I saw an unfamiliar car. Thirty minutes passed and the car was still in my driveway. It drove up and down the drive as if aware I was watching. My friend told me to call the cops‚ but I refused. Soon the phone calls started again. I heard noises in the background‚ but I couldn’t tell what they were. I really didn’t want that person to get out of the car and start toward the house. If they did‚ I didn’t know what I’d do. None of the doors
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Financial Management TA Mid-term Exam March 27‚ 2012‚ 9:3o - 11:00 1. True or False Comment on the correctness of the following statements with maximum 5 lines each. (20%) a) The IRR is larger than the discount rate if the NPV>0 False‚ there are projects with more than one IRR where the statement is not true and there are projects that have the inflow now and the outflows in future years where this relation is inversed. b) Yield to maturity is not a valid measure of expected return for a zero
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Organizations and Society 34 (2009) 770–786 Contents lists available at ScienceDirect Accounting‚ Organizations and Society journal homepage: www.elsevier.com/locate/aos Making imaginary worlds real: The case of expensing employee stock options Sue Ravenscroft a‚*‚ Paul F. Williams b‚1 a b Department of Accounting‚ Iowa State University‚ 2330 Gerdin Building‚ Ames‚ IA 50011-1350‚ United States Department of Accounting‚ North Carolina State University‚ Box 8113‚ Raleigh‚ NC 27695-8113
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Explore how Priestly presents and develops the relationship between Shelia and Mrs. Birling in ‘An Inspector Calls’. Priestly uses dialogue and stage directions to show a void between different generations. Although Mrs. Birling is Shelia’s mother she still refers to her as a ‘girl[s]’. The audience can sense Mrs. Birling’s condescending tone and how she still retains the view that Shelia is an immature and ignorant ‘girl[s]’ even though she is a fully grown adult who will soon be wed. This is ironic
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put option grants the holder the right to: buy the underlying asset at the exercise price on the expiration date. buy the underlying security at a stated price at any time up to and including the expiration date. sell the underlying security at the strike price on or before the expiration date. buy the underlying asset at or below the exercise price on or before the expiration date. sell the underlying asset at the strike price only on the expiration date. Question 5: 1 pts A call option
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to it later. If you do not click finish your score will not be displayed on your e-workbook home page. However‚ your results will be provided to your instructor. [2 marks]- 1 of 3 ID: FRM.O.CP.01A Select all of the features of purchasing a put option on the Australian Stock Exchange (ASX) from the list below: | This derivative security costs nothing to enter.（F） | | This derivative security is a tailored OTC contract.（F） | | This derivative security is a standardized exchange traded
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