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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Chapter 14 14.3. Explain the principle of risk-neutral valuation. The price of an option or other derivative when expressed in terms of the price of the underlying stock is independent of risk preferences. Options therefore have the same value in a risk-neutral world as they do in the real world. We may therefore assume that the world is risk neutral for the purposes of valuing options. This simplifies the analysis. In a risk-neutral world all securities have an expected return equal to risk-free
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Question 1 Call options on XYZ Corporation’s common stock trade in the market. Which of the following statements is most correct‚ holding other things constant? Answer Correct Answer: The price of these call options is likely to rise if XYZ’s stock price rises. Question 2 Other things held constant‚ the value of an option depends on the stock’s price‚ the risk-free rate‚ and the Correct Answer: All of the above. Question 3 Which
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FINAL EXAM 1. The accounting measure of a firm’s equity value generated by applying accounting principles to asset and liability acquisitions is called ________. A. book value 2. New-economy companies generally have higher _______ than old-economy companies. B. P/E multiples 3. Earnings yields tend to _______ when Treasury yields fall. A. fall 4. A firm that has an ROE of 12% is considering cutting its dividend payout. The stockholders of the firm desire a dividend yield of 4% and a capital
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1. A company enters into a short futures contract to sell $5000. The current future price is 250 cents per pound. The initial margin is $3000 and the maintenance margin is $2000. What price change would lead to a margin call? Under what circumstances $1500 could be withdrawn from the margin account? 2. Stock is expected to pay a dividend of Tk 10 per share in 2 months and again in 5 months. The stock price is Tk 500 and risk free rate of interest is 8% p.a. with continuously compounded for all
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day. And what really important is that all the options gives the investor the option but not the commitment to buy in case of a call or sell in a case of a put. Finally‚ the American option will be always worth at least what a European option is worth. There is a difference between a long call and long put and short call and short put. first of all‚ a long call‚ an investor who believes that the stock’s will rise might buy the right to buy rather than just buying the stock itself. He would
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Chapter 10 Summary Piggy wants to go and get the glasses back from Jack’s lot and Ralph doubtfully agrees. Ralph begins getting worked up about the smoke‚ Piggy tells him that it’s so they can be rescued. Ralph gets worked up. Ralph calls an assembly and Roger flings a stone and Samneric. Ralph and Jack argue and eventually fight about Piggy’s glasses whilst Piggy is left helpless. Jack’s savages tie up Samneric. Piggy tries to reason with Jack’s lot with the conch‚ but Roger pushes the rock over
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The book the Call of the Wild by Jack London is a book about a Saint Bernard named Buck‚ and his journey through the Yukon with many different owners. Along the way he goes through phases‚ to live and go into the wild. There are many many things that lead up to Bucks permanent departure into the wild. The first thing that chronicles the call is that Buck hears the howl of a wolf and runs into the woods to find the wolf‚ where he growls at the wolf and lets him know that he is in charge. “Never
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review and help her train others in the essentials of professional telephone communication. OBJECTIVES Explore professional telephone communication Place telephone calls Use voice mail Leave professional messages Take calls for other people Screen‚ hold‚ and transfer calls Develop cell phone etiquette Receive telephone calls g 9781439041130_UnitC_pp2.qxd 5/4/09 11:08 PM Page 50 UNIT C Verbal Communication Exploring Professional Telephone Communication In the workplace
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Office. She taught me how answer telephone calls‚ how to transfer telephone calls to other department‚ and how to give fax tone to the caller. Ma’am Mara told me that the General Manager Sir Edwin Fojas was out of town on two (2) months vacation leave and the Compliance Officer Sir Basil Perea was on a seminar‚ but will be reporting at the bank after two (2) days. I learned on that first day that I have to be very patient especially in answering phone calls. On the first week of my training‚ I always
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