Please show all work and thought process to how you obtain each answer. Thank you!!

Caseb The Little Case AN INVESTMENT SITUAHON MINI-CASE LucasLittle hasbemaskedbyhisdimttoreviewthenancialstatementsofStuff Stores Company. Mr. Little's client is considering making a substantial purchase of Stuff Stores stock. Before doing so, the client would like to know a bit more about the nancial stability of the company. The information in Table V1.6 should be used to conduct a basic analysis of Stuff Stores' nancial situation. TableVl.0 Annual Financial Data for Stuff Stores Company (3 millions} Financial Attribute hr 1 Year 2 Current Market capitalization 200.0005 m 249,920.15 Total salas 139.2000 193.2950 Net income iearningsi 4,430.0 6,295.0 Dividends per share _ .16 .20 .24 Shares outste riding 4,474.8 4,443.8 4,464.5 Total assets 64,654.0 78,130.0 Debt 10,9910 19324.0 Shareholder'e equity 19,136.0 24,210.0 31,343.0 Cash flow 1580.0 8,194.0 9,004.0 Other relevant data include: 0 Beta for Stuff Stores stock: .85 0 Standard deviation for Stuff Stores stock: 14.5% 0 Average return for StuHStores stock: 10.5% '- Risk-free rate of return: 4.0% 0 Return on the market: 9.0% Information on similar stocks is shown in. Table V1.7. TableVlJ Data for Similar Stocks Company Wigwam Stores, Inc. Maryland Markets Pacic Mercantile, Inc. Please use this information to answer the following questions: Case Questions 1. Based on current information, what is the net prot margin for Stuff Stores? 3. 1.98%} b. 2.97% c. 3.26% d. 3.56% E. 3.88%} 2. Basedoncurrentinformam,tlteprioetoeamingsrao (P/E)foroneshareof5tuff5toresstock 15. a. 1 .29 b. 7.97 c. 20.08 (1. 26.02 e. 39.70 3. When comparing StuffStores stocktosimar swcksixttemarkebwhirhhasthehigtmtrequired rate of return? a. Stuff Stones Company. b. Wigwam Stores, Inc. c. Marryland Markets. (1. Pacic Mercantile, Inc. e. Stuff Stores Company and Pacic Mercantile, Inc. are the same. 4. Based solely on past performance compared to the required rate of return, which stock should Mr. Little's client avoid? a. Stuff Stores Company. is. Wigwam Stores, Inc. c. Marryland Markets. (1. Pacic Mercantile, Inc. e. Both Marryland Markets and Pacic Mercantile, Inc. 5. Mr. Ijttlewouldliketorankthefourstocks mastandardizedwaybeforemakingarecommendation to his client. Using the average stock return data provided, rank the four stocks from highest to lowest using the Sharpe ratio. 1. Stuff Store; Company. 11. Wigwam Stores, Inc. El. Maryland Markets. IV. Pacic Mercantile, Inc. a. II, II[, I, and IV b. IV, III , II, and I c. III, I, IV, and ]I d. IV, 1, D1, and II e. L IV. III, and II 6. Mr. Little's client has noticed that the price of Stuff Stores Company stock has remained steady during the past six months. He is convinced that the stock will continue to trade in a narrow range. He would like to make money on the stock, however. Which of the following strategies will cause Mr. Little's client to experience the greatest potential loss if Stuff Storee' stock price begins to fluctuate more widely? a. Selling a naked put option. b. Selling a naked call option. c. Selling a covered call option. d. Buying a call option. e. Buying shares in Stuff Stores Company directly. 7. Assume that Mr. Little's client decides to purchase shares in Stuff Stores stock to add to his sizable portfolio. The client tells Mr. Little that he does not want to incur the cost of selling the stock or the entire portfolio. The client also does not want to risk mistiming the market should stock prices start to fall. One snategy for the client to protect against a possible decline in both Stuff Stores stock price and the value of the portfolio would be to a. buy an index call option. b. sell an index call option. c. buy an index put option. d. sell an index put option. e. avoid all options strategies because the client cannot protect against the decline with these options. 8. If the market risk premium were to increase, the value ofcommon stock, including StuffStores Company stock, (holding all other factors constant) would' a. not change because this does not affect stock values. b. increase to compensate the investor for increased risk. c. increase because of higher risk-free rates. d. decrease to compensate the investor for increased risk. e. decrease because of lower risk-free rates. 9. Mr. Little thinks that he has found an interesting bond investment for his client's portfolio. Mr. Little, when searching for investment ideas, focused on his client's goal of return maximization. The bond has a face value of $1,000 with a maturity date in seven years. The bond 's coupon rate is 6.25% compounded annually. Today, the bond sells for $1,135.00. The indenture agreement states that the bond can be called for $1,100 after five years. Which of the following statements is (are) true? a. Thecurrentyieldisgreater thanboththe yield tomaturityandyieldtocall. b. Given the client's investment objective, this bond should do particulary well if interest rates start to increase. c. Mr. Littlecanlockinayieldtomamtytatishigherthanthecurrentyieldbypurchasing thebondtoday. d. The value of the bond today in comparison to the spread in the yield to maturity and the current yield indicates tht this bond will not be called early. 10. According to the dividend growth model method of stock valuation, which of the following statements is true, assuming that Mr. Little's client has a required rate of return of 16% and that the dividend hasgrownfrom .16to .24inthreeyears? I. The current Stuff Stores stock price exceeds the calculated value. 1]. The current Stuff Stores stock price is less than the calculated value. III. Using the dividendgrowthmodel as theonlymeasure, theStuStores stock is undervalued. IV. The market price and the calculated value for Stuff Stores match closely, as expected given the high degree of efciency in the markets. a. Ionly b. III only c. II and 1]] only d. III and IV only