Question
1. Suppose you believe that Du Pont's stock price is going to decline from its current level of $ 84.35 sometime during the next 5
1. Suppose you believe that Du Pont's stock price is going to decline from its current level of $ 84.35 sometime during the next 5 months. For $ 522.92 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $70 per share. If you bought a 100-share contract for $ 522.92 and Du Pont's stock price actually changed to $ 68.46 , your net profit (or loss) after exercising the option would be ______? Show your answer to the nearest .01. Do not use $ or , signs in your answer. Use a - sign if you lose money on the contract.
2. Dandy Product's overall weighted average required rate of return is 10 percent. Its yogurt division is riskier than average, its fresh produce division has average risk, and its institutional foods division has below-average risk. Dandy adjusts for divisional by adding or subtracting 3 percentage points and project risk by adding or subtracting 4 percentage points. Thus, the maximum adjustment is 3 + 4 percentage points. What is the risk adjusted required rate of return for a low-risk project in the yogurt division?
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