1.You are considering investing in a certain stock. Using various tools and analyses, you anticipate that the stock will have a return of 20% over the coming year. The stock has a beta of 0.9. Assume that the risk free rate is 2.5%, and the expected return of the market is 7.5%. If you were to invest in this stock, what would be your abnormal return?

Hint: your answer should be the difference between the stock's anticipated return and its required return.

2.Use the bond term's below to answer the question .

Maturity: 10 years

Coupon Rate: 4% (annual coupons)

Face value: $1,000

YTM 2% (interest rate)

Assuming the YTM remains constant throughout the bond's life, what is the bond's price in year 6?

A. $1,076.15

B. $1,179.65

C. $1,055.05

D. $1,203.24

3.Bond Features

Maturity (years) =6

Face Value =$1,000

YTM =3.00%

Coupon Rate =6.00%

Coupondates (Semiannual)

If the YTM stays at 3% what is the bond's price at semiannual period 4 ?

A. $1,112.29

B. $1,163.61

C. $1,113.40

D. $1,164.78

4.Consider the following factors that determine the value of a call option. Assume that, all else being equal, each of these variablesincreases. What would be the effect on the value of the option?

- Value of underlying asset (increase/decrease)

- Strike price (increase/decrease)

- Volatility (increase/decrease)

- Time to expiration(increase/decrease)

- Risk-free rate (increase/decrease)