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Answer the Following Statements Precisely 1). What is the difference between option premium and option price? 2). According to CAPM, what is the expected rate
Answer the Following Statements Precisely
1). What is the difference between option premium and option price?
2). According to CAPM, what is the expected rate of return for a stock with a beta of 1.2, when the risk-free rate is 6% and the market rate of return is 12%?
3). An investor buys a put on a stock selling for $60, with a strike price of $55 for a $5 premium. Find the maximum gain.
4). In a 5-year period, the annual returns on an investment are 5%, -3%, -4%, 2% and 6%. Find the standard deviation of annual returns on this investment.
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