Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 2, Problem 9P
To determine

The incorrect statement.

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(d) The following stock follows the Black-Scholes framework. (i) Current price is $45 (ii) Pays continuous dividends of 2% per annum (iii) Volatility is 30% per annum (iv) R-F-Ris 5% papc Determine the premium for a 3-month EP0 on a 1- year futures contract on the stock with strike price $50
Which of the following statements is incorrect?(a) Holding on to cash is the most risk-free investment option.(b) To maximize your return on total assets (ignoring financial risk), you mustput all your money into the same type of investment category.(c) Diversification among well-chosen investments can reduce market volatility.(d) Broader diversification among well-chosen assets always leads to a higherreturn without increasing additional risk.
A Peruvian investor buys 180 shares of a U.S. stock for $7,560 ($42 per share). Over the course of a year, the stock goes up by $3 per share. (a) If there is a 10 percent gain in the value of the dollar versus the nuevo sol, what will be the total percentage return to the Peruvian investor? Return to the Peruvian investor % (b) Now assume that the stock increases by $8, but that the dollar decreases by 10 percent versus the nuevo sol. What will be the total percentage return to the Peruvian investor? Use .90 in place of 1.10 in this case.
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