Need help with 10-11

10. Assume that all Australians must invest in Australian stocks and all Canadians must invest in Canadian stocks. Further assume that all investors in Australia are passive investors. That is, they place all of their investments in passive index funds that hold Australian stocks. Conversely, assume that in Canada, no investors place their wealth in passive index funds. Which of the following statements is most accurate. a. On average, the deviations between the fundamental and the market value of stocks will be greater in Australia than they are in Canada. On average, the deviations between the fundamental and the market value of stocks will be greater in Canada than they are in Australia. c. On average, there should be no difference in the deviations between the fundamental and the market value of stocks traded in Australia and in Canada. 11. Apnex, Inc., is a biotechnology firm that is about to announce the results of its clinical trials of a potential new cancer drug. If the trials were successful, Apnex stock will be worth $70 per share. If the trials were unsuccessful, Apnex stock will be worth $18 per share. Suppose that the moming before the announcement is scheduled to be made, Apnex shares are trading for $55 per share. Given this information, select the most accurate statement. Assume that the market efficiently processes all public information. a. The market expects that Apnex will announce that the trials were successful. b. The market expects that Apnex will announce that the trials were unsuccessful. c. The market thinks that there is a 50% chance that Apnex will announce that the trials were successful. d. The market thinks that there is a greater than 50% chance that Apnex will announce that the trials were successful. e. The market thinks that there is a less than 50% chance that Apnex will announce that the trails were successful. 12. Cronus Airlines has a contract that gives them the opportunity to purchase up to 13,000,000 gallons of jet fuel at $2.00 per gallon. The current market price of jet fuel is $2.38 per gallon. Cronus believes they will only need 4,000,000 gallons of jet fuel. What is the value of this opportunity? The value of this opportunity is