(1) When a firm is funded by only equity and no debt, its weighted average cost of capital (WACC) is the same with its cost of equity.

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(2) Consider company G and company M which operate in the same country. Company G has high growth opportunities ahead and plans to reinvest most of its earnings. Company M is a mature firm which plans to payout most of its earnings as dividends to stockholders. Both have the same share price, same beta, and thus same expected return (using the CAPM). We would expect the futures price of company G to be higher than the futures price of company M (same maturity date on each futures contract).

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(3) A protective put is an investment strategy that involves purchasing an asset and a put on that asset. It guarantees maximum payoff equal to the puts exercise price.

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(4) Other things being equal, a higher degree of risk aversion of the average investor implies a lower risk premium.

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