1. Are the following statements True or False? If the statement is correct, write down 1T. [20 marks] Otherwise write down F. a) You purchase a share of Dell stock for $100. One year later, after receiving a dividend of $3, you sell the stock for $107. Your holding period return, rounded up to two decimal points, is 10.00% [2.5 marks] b) The Dow Jones Industrial Average is calculated using price-weighted average which gives lower-priced shares more weight in determining performance of the index. [2.5 marks] c) The actual sale price that a buyer pays for the bond includes accrued interest if the bond is purchased between coupon payments [2.5 marks] d) Suppose a convertible bond is issued at par value of $1,000 and is convertible into 40 shares of a firm's stock. Further, suppose the bond is zero coupon and interest rate-0 If current stock price is $20 per share, the option to convert the bond is profitable [2.5 marks] e) White Wedding Corporation will pay a $3 per share dividend next year. The company pledges to increase its dividend by 4 percent per year, indefinitely. If you require a 10 percent return on your investment, the price of the stock today is $30 [2.5 marks] f) Since investors are compensated for holding risk, two securities with the same vari- ance should have the same expected return. [2.5 marks] g) A fixed-income security can pay variable income stream to owner of the security [2.5 marks] h) Selling a futures contract provides insurance to someone who holds the underlying asset, because it guarantees that the asset can always be sold at or higher than the futures price [2.5 marks]