1. Midwest Lumber had a profit margin of 5.1%, a total assets turnover of 1.6, an interest burden and tax burden of 1, and an equity multiplier of 1.8. What was the firm's ROE?

A. 14.69%

B. 14.99%

C. 14.39%

D. 15.59%

E. 15.29%

2. The current stock price of Alcoa is $68 and the stock does not pay dividends. You think in the near future there will be a dramatic movement in stock price depends on the result of a test for new drug. However the direction of the price movement is not clear, so you decide to establish a straddle strategy using at the money options with 1 month to expiration to take advantage of it. Both put and call at the money options have a premium of $5. 1 Month later, the test is postponed, as a result the stock price drops to $65. What is your profit or loss using your strategy?

	A.	700 profit
	B.	700 loss
	C.	300 loss
	D.	300 profit
	E.	1000 loss
	F.	1000 profit