FINA 4137

1.The maximum loss of a long call position is equal to:

a. the exercise price

b. the strike price

c. market - strike price

d. call premium

2.Congress just approved an unexpected corporate tax hike. Holding everything else constant, how would you expect the stock market to react?

a. Market rally because the budget deficit will be increasing.

b. Market sell-off because higher taxes will reduce future cash flows for equity holders.

c. Market rally because the market risk premium would adjust to the new tax rate

d. Market sell-off because the Fed would see the increase as inflationary.

3.During 2021, which investment sector provided the highest level of return?

a. Real Estate

b. Large Cap Stocks

c. Small Cap Stocks

d. International Stocks