Question
Margot Snow bought 100 shares of common stock of Tundra at $80 each share three months ago. She also bought a put option contract on
Margot Snow bought 100 shares of common stock of Tundra at $80 each share three months ago. She also bought a put option contract on 100 shares of Tundra with an exercise price of $80 (per share) and expiry date of three months. She paid for the put $7 per share. If the contract expires today and the share price of Tundra is $50, then the profit of Margots investment strategy is ________.
Select one:
a. -$700
b. $0
c. -$3,700
d. -$7
e. $2,300
Which of the following is true?
Select one:
a. If a projects cash flows are uncertain then the net present value discount rate should be higher than the risk free rate.
b. The expected return on a capital budgeting project should be at least as great as the expected return on a financial asset of comparable risk.
c. All of THESE are true.
d. If the risk free rate is 4% and the market risk premium is 6% then the expected return is 10% for a security with the same beta as the market portfolio.
In economic expansion, the net income of an unlevered firm is higher than the net income for the same firm levered.
Select one:
True
False
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