You believe Apple's (AAPL) common stock is either going to hover near its current market price of $67.75 or, if it has a breakout, it will be to the upside. You choose to set up a 1:2 ratio put spread by going long one July 72.50 put and going short two July 62.50 puts. The July 72.50 puts have a premium of $6.13, while the premium on the July 62.50 puts is $3.88. What is the maximum loss for this position? Enter as a negative number. If unlimited enter -8888.
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- From the data below for Apple (AAPL) stock, calculate the upper and lower Bollinger bands, which represent plus (or minus) two standard deviations of the 20-day simple moving average added (subtracted) from the 20-day simple moving average. If the daily price approaches or exceeds the upper Bollinger band, traders will look for a continued upward movement in the stock price. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Date AAPL Close 20-Day Simple Moving Average Standard Deviation of 20-Day Moving Average Lower Bollinger Band Upper Bollinger Band 3/26/2019 186.96 181.05 3.57 3/27/2019 188.64 181.67 3.77 3/28/2019 188.89 182.35 3.97 3/29/2019 190.12 183.13 4.17 4/1/2019 191.41 183.88 4.37 4/2/2019 194.19 184.65 4.56 4/3/2019 195.52 185.57 4.74 4/4/2019 195.86 186.62 4.89 4/5/2019 197.17 187.78 5.03 4/8/2019 200.27 188.98 5.16 4/9/2019 199.67 190.04 5.27 4/10/2019…The following three stocks are available in the market: E(R) β Stock A 10.9% 1.31 Stock B 14.1 1.11 Stock C 16.6 1.51 Market 14.5 1 Assume the market model is valid. a. The return on the market is 15.3 percent and there are no unsystematic surprises in the returns. What is the return on each stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Assume a portfolio has weights of 25 percent Stock A, 40 percent Stock B, and 35 percent Stock C. The return on the market is 15.3 percent and there are no unsystematic surprises in the returns. What is the return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)You are given the following information: Return on State of Economy Stock A Bear Normal Bull Return on Stock B 111 -.054 157 106 .082 242 Assume each state of the economy is equally likely to happen. a. Calculate the expected return of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the covariance between the returns of the two stocks? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .321616.) d. What is the correlation between the returns of the two stocks? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .3216.) a. Stock A expected return…
- If Stock I is correctly priced right now, its Beta must be ______ . Round your answer to 2 decimal places (example: if your answer is 1.2357, you should enter 1.24). Margin of error for correct responses: +/- .02. expected return (implied by market price) Beta Stock I 12.4% ?? S&P500 11% T-bonds 4%Wildhorse Industries common stock has a beta of 1.8. If the market risk-free rate is 4.6 percent and the expected return on the market is 8.6 percent, what is Wildhorse’s cost of common stock? (Round answer to 1 decimal places, e.g. 15.2%.) Cost of common stock enter the Cost of common stock in percentages rounded to 1 decimal place %Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Recession 0.35 0.06 -0.15 Normal 0.40 0.09 0.16 Boom 0.25 0.13 0.36 Calculate the expected return for the two stocks. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Calculate the standard deviation for the two stocks. Note: Do not round your intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
- You are given the following information: State of Economy Bear Normal Bull Return on Stock A a. Stock A Stock B b. Stock A Stock B 114 103 085 Assume each state of the economy is equally likely to happen. a. Calculate the expected return of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the covariance between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) d. What is the correlation between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.) Return on Stock B C.…You are given the following information: Probability of State of Economy Return on Return on State of Stock J Stock K Economy Bear .28 -.023 .031 Normal Bull .63 .135 .059 .09 .215 .089 a. Calculate the expected return for each of the stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for each of the stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the covariance between the returns of the two stocks? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .321616.) d. What is the correlation between the returns of the two stocks? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .3216.) a. Stock J expected return 9.80 % Stock K expected return 5.39% b. Stock J standard deviation Stock K standard deviation c.…Consider the three stocks in the following table. Pt represents price at time t, and ot represents shares outstanding at time t. Stock C splits two for one in the last period. Stock Po P1 21 75 65 75 75 75 55 150 50 150 50 150 110 150 115 150 60 300 A B с с 20 75 P2 a. Rate of return b. Rate of return 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. 22 % %
- A stock is currently trading at $83. A long straddle was purhcased with a strike price of $85. The premium paid for the call was $4.40 and the premium paid for the put was $6.75. What would breakeven prices for the straddle at expiration?A stock's return has the following distribution: Demand for the Company's Products Probability of This Demand Occurring Rate of Return if This Demand Occurs (%) Weak 0.1 - 25% Below average 0.2 -9 Average 0.4 10 Above average 0.2 40 Strong 0.1 70 1.0 Calculate the stock's expected return and standard deviation. Do not round intermediate calculations. Round your answers to two decimal places. Expected return: % Standard deviation: %You are building out your 1 x 3 point and figure chart that is currently in a column of X's with the last X at $17. When you look at the high, low, close data for today you see that the high was $17.99 and the low was $14.01. The stock closed at $15.01. What do you add to the chart for today? O a. A new trend line b. You add noting to the chart c. A new column of O's to the $15 level d. A new X at $18
