Question
3. An investor believes that the price of a stock, say IBM's shares, will increase in the next 60 days. If the investor is correct,
3. An investor believes that the price of a stock, say IBM's shares, will increase in the next 60 days. If the investor is correct, which combination of the following investment strategies will show a profit in all the choices?
(i) - buy the stock and hold it for 60 days
(ii) - buy a put option
(iii) - sell (write) a call option
(iv) - buy a call option
(v) - sell (write) a put option
A. (i), (ii), and (iii)
B. (i), (ii), and (iv)
C. (i), (iv), and (v)
D. (ii) and (iii)
4. Which of the following is NOT a type of corporate bond traded on foreign markets?
A. Sukuk
B. Samurai
C. Bulldog
D. ADR
E. Rembrandt
5. Emerald Energy is an oil exploration and production company that trades on the London stock market. Over the past year, the stock price moved from 10 per share to 12 per share. Over the same period, the exchange rate has moved from $2.00 = 1 to $1.80 = 1. Calculate the percentage rate of return in terms of U.S. dollars. A. 32% B. 30% C. 8%
D. None of the above E. There is not enough information to compute the investor's annual percentage rate of return in terms of the U.S. dollars.
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