Say you own an asset that had a total return last year of 12.6 %. If the inflation rate last year was 5.4 %, what was your real return?(Round answers to 4 decimal places, round intermediate calculations to 5 decimal places)

Real Return

2.

You purchase a bond with a coupon rate of 9 % and a clean price of $937. If the next semiannual coupon payment is due in 3 months, what is the invoice (dirty) price?(Round answers to 2 decimal places, round intermediate calculations to 5 decimal places)

Dirty Price

3.

The newspaper reported last week that Lowery Enterprises earned $41 thousand this year. The report also stated that the firm's return on equity is 8.4 %. Lowery retains 70 % of its earnings. What is the firm's earnings growth rate?(Round answer to 4 decimal places, round intermediate calculations to 5 decimal places)

What will next year's earnings be?(Round answer to 2 decimal places, round intermediate calculations to 5 decimal places)

Earnings Growth Rate

Next Year's Earnings

4.

Hughes Co. is growing quickly. Dividends are expected to grow at a 23.7 % rate for the next three years, with the growth rate falling off to a constant 4.5 % thereafter. If the required return is 11.9 % and the company just paid a $1.43 dividend, what is the current share price?(Round answer to 2 decimal places, round intermediate calculations to 5 decimal places)

Current Share Price

5.

You wrote 6 call option contracts on XYZ stock with a strike price of $40 and an option premium of $1.23. What is your net gain or loss on this investment if the price of XYZ is $43.56 on the option expiration date?(Round answer to 2 decimal places, round intermediate calculations to 5 decimal places)

Profit/Loss

6.

You purchased 4 ABC 30 call option contracts at a quoted price of $0.89. What is your net gain or loss on this investment if the price of ABC is $34.73 on the option expiration date?(Round answer to 2 decimal places, round intermediate calculations to 5 decimal places)

Profit/Loss

7.

Three months ago, you purchased a put option on Nole stock with a strike price of $60 and an option price of $1.39. The option expires today when the value of Nole stock is $61.39 Ignoring trading costs and taxes, what is your total profit or loss on your investment?(Round answer to 2 decimal places, round intermediate calculations to 5 decimal places)

Profit/Loss

8.

An investor purchases a long call at a price of $3.75. The strike price is $20. If the current stock price is $32.53, what is the break-even point for the investor?(Round answer to 2 decimal places, round intermediate calculations to 5 decimal places)

Break-Even

9.

The price of Ervin Corp. stock will either be $66 or $88 at the end of the year. Call options are available with one year until expiration. T-bills currently yield 3.36 %. Suppose the current price of Ervin stock is $76.(Round answer to 2 decimal places, round intermediate calculations to 5 decimal places)

a) What is the value of the call option if the strike price is $75 per share?

b) What if the strike price is $55 per share?

a) Call Premium

b) Call Premium

10.

A stock is currently selling for $42 per share. A call option with an exercise price of $45 sells for $3.44 and expires in three months. If the risk-free rate of interest is 3.2 % per year, compounded continuously, what is the price of a put option with the same exercise price and time until expiration?(Round answer to 2 decimal places, do not round the number e in your calculation)

Put Premium