Question:

You are using the binomial tree model (drawn and labelled below) to model a stock's price movements and price a 6-month European option on the stock, which is trading at $25. The risk-free interest rate is 2% p.a.c.c. One period later, stock price in the down state will be $22. From there, when the stock price continues to go up, the option will expire worthless; when the stock price goes down instead, the option will expire with a value of $3.24.

a. Is this a call or a put? (1 mark)

b. Calculate the remaining stock prices and option values that correspond to every node on the tree. Complete working process must be shown for marks. (10 marks)

c. If the option is written on a futures contract, identify the adjustment you need to make in part (b), but don't re-calculate the values. (1 mark)

Question # 3 This is about Hypothesis Proportion Confidence Interval (Level of confidence) Saint Francis Hospital in Mott Haven believes the percentage of residents in the neighborhood who have Healthcare insurance is 60%. The General Manager for the Emergency Room believes this number is to be different. He said, he conducts his own survey of 200 people and found that 100 people respondent yes to owning Health insurance Questions? 1) State the Null and Alternative Hypothesis?QUESTION 1 Go to the Goldman Sachs website. Mouse over Who We Are and select Our Firm At a Glance After exploring the page (and anything else on the site). answer the following question: Which one of the following is NOT a business segment of Goldman Sachs? O Treasury management Investment banking O Investing and lending O Institutional client services Investment management QUESTION 2 Go to the Morgan Stanley Investment Banking & Capital Markets website and select Capital Creates the Next Episode. What is the dollar amount of the note offering for Netflix in February 2015? QUESTION 3 Go to the Vanguard website and select Vanguard 500 Index Fund Investor Shares (VFINX). How many stocks are held by the fund? Select the Portfolio & Management tab to find the answer. QUESTION 4 Go to the Vanguard website and select the Vanguard 500 Index Fund Investor Shares (VFINX). From the Product Summary on the Overview tab, what is the key risk of investing in this fund? Volatility that comes with full exposure to the stock market O Volatility that comes with full exposure to foreign exchange risk Volatility that comes with full exposure to default risk [ Volatility that comes with full exposure to liquidity riskQuestion 35 2 points Love ANTE Heartland Corporation records all insurance premiums as prepaid insurance, Additional Information for the current year is presented below Prepaid Insurance, January 1 16-LOOD Insurance expense for year $150,000 Prepaid Insurance, December 31 $75,000 What is the total amount of insurance premiums paid during the year? O A $225,000 O B. $150.000 GC. $139,000 G D. $161,000QUESTION ONE [20] Read the following summary about Rich & Poor Company and answer the required questions. Rich & Poor is a multinational company with businesses in several countries around the world. Rich & Poor frequently has expenditures and receipts denominated in various foreign currency, including purchases and sales of finished products, subsidiary dividends, and investment operations in various countries. Rich & Poor uses a variety of input resources in the production and purchase most of these input resources from foreign suppliers. To finance its operations, Rich & Poor uses a variety of funding sources, such as commercial paper, term debt, and lines of credit from major international commercial banks. The company invests any surplus cash in securities of various types and maturities, the value of which is subject to fluctuations in interest rates. Rich & Poor has a credit division, which provides financing to customers wanting to purchase its product. Overall, Rich & Poor faces several risks. Based on the above discussion, recommend and justify the risk exposures that should be reported to Rich & Poor risk management team