D. 7.69 percentE 8.26 percent16. An increase in which of the following would increase the price of a call option on commonstock, all else equal?L Stock priceI1. Stock price volatilityIIL. Interest ratesIV. Exercise priceA II onlyB. II and IV onlyC. I, II, and III onlyD. 1, 1IL and IV onlyE. I, II, III, and IV

A call option is direct proportional to the stock volatility in the market. if the volatility…

Answered: D. 7.69 percent E 8.26 percent 16. An…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Problem 2-12 (Algo) Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period. Stock Po A B P1 01 P2 02 00 140 145 145 145 145 145 135 290 130 290 130 290 270 290 280 290 145 580 C Required: Calculate the first-period rates of return on the following indexes of the three stocks (t = 0 to t = 1): Note: Do not round intermediate calculations. Round your answers to 2 decimal places. a. A market-value-weighted index. b. An equally weighted index. a. Rate of return b. Rate of return % %
Question 9 2 pts An investor borrowed $10,000 to buy shares of stock of a chain of retail gift stores. The loan was for 120 days at 9% ordinary simple interest. Compute the interest that the investor will pay on the due date. (Use a 360-day year.) $3,633.33 $450 $300 $330
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1. 1- Calculate the beta adjusted by the degree of freedom for stock X relative to the equity market using the information from the table (performance): A B 0.82 1.22 42.07 Year 1 2 3 4 5 6 7 None of the options is true X -7 -11 21 15 8 9 -2 Market 7 15 20 17 10 7 -1
QUESTION 7 An investor wishes to construct a portfolio consisting of a 70 percent allocation to a stock index and a 30 percent allocation to a risk-free asset. The return on the risk-free asset is 4.5 percent, and the expected return on the stock index is 12 percent. Calculate the expected return on the portfolio. a. 16.50 percent b. 17.50 percent c. 14.38 percent d. 9.75 percent e. 8.25 percent
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QUESTION 13 The most common practice is a variation of the: O a. residual theory of dividends O b. constant dividend payout ratio Oc. stable dividend policy O d. low dividend plus extra policy
6
Q2 - Returns on stocks X and Y are listed below: Period 1 2 3 4 5 6 7Stock X 4% -2% 5% -1% 10% 7% 12%Stock Y -3% 7% 4% 2% 2% 8% -3% Consider a portfolio of 10% stock X and 90% stock Y. What is the mean of portfolio returns? Please specify your answer in decimal terms and round your answer to the nearest thousandth (e.g., enter 12.3 percent as 0.123).
Question 77 For the following, fill in the blanks with the appropriate term(s). For questions that give you two or three choices to choose from, circle the most appropriate. (7.1) The return on an investment comes in two forms: the and the two forms: component gain or loss. The return on investment in common stock comes in gains (or losses).. and gains (or losses) for an investment in common stock arise from in the value of the investment. (7.2) The total percentage return for an investment in common stock is the sum of the yield and the [(Pt+1-P)/ Pt] The gains yield. The dividend yield is defined algebraically as gains yield is defined algebraically as (7.3) The debt represented by T-bills is virtually free of any life. We will call the rate of return on such debt the over its short and we will use it as a kind of benchmark. The difference between the rate of return for a risky investment and the return on T-bills is the for the risky asset. som levo (7.4) An investor's portfolio is…
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Required: a-1. If the stock price at option expiration is $143, will you exercise your call? multiple choice 1 Yes No a-2. What is the net profit/loss on your position? (Input the amount as a positive value.) a-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) b-1. Would you exercise the call if you had bought the November call with the exercise price $130?multiple choice 2 Yes No b-2. What is the net profit/loss on your position? (Input the amount as a positive value.) b-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) c-1. What if you had bought the November put with exercise price $140 instead? Would you exercise the put at a stock price of $140?multiple choice 3 Yes No c-2. What is the rate of return on your position? (Negative value should be indicated by a minus…

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