Your old friend, Alex Mason, is a forwards and futures trader at Goldman Sachs. You look up his
quotes for Capital Ventures. Capital Ventures is trading at $472.91, the monthly risk-free rate is
0.25% per month and Mason is quoting a forward price of $480.08 for a 6 month forward contract.
Capital Ventures is not expected to pay a dividend in the next 6 months.
1. Is there an arbitrage opportunity?
2. What steps should you take to realize the arbitrage profits?
3. What are the arbitrage profits per share of Capital Ventures that could be realized today?
Your manager has asked you look into the basic properties of single stock options trading in the US.
The firm is considering investing in options as an alternative to investing the underlying equities. Select
a large cap US stock and find information about the equity options that are being traded on that stock
using Yahoo Finance.
4. Consider all the call options being traded on the stock.
a. How does the option premium change as the strike price increases? Why?
b. Holding the strike price constant, how does the option premium change as the duration
of the option increases? Why?
5. Consider all the put options being traded on the stock.
a. How does the option premium change as the strike price increases? Why?
b. Holding the strike price constant, how does the option premium change as the duration
of the option increases? Why?
Please paste in a copy of the Yahoo Finance screens into your document showing the prices that you
discuss in your answers
received it Clear my choice Question 9 Toyota, a Japanese firm, produces a $25,000 car in its plant located in South Carolina, U.S. How does is factor into GDP? Not yet Irawend Select one Points out of O a. $25,000 is added to Japan's GDP I Rag quilton O b. Nothing is added to either country's GOP O c. $25,000 is added to both U.S GDP and Japan's GDP O d. $25 000 is added to U.S. GDP Quantien 10 The supply and demand model shows us that Not you Select one: Points out of 1.00 O a if there is a surplus in a market, buyers will change their preferences and decrease their demand until the surplus is gone. F Rag question O b. once a market reaches equilibrium, the market price will stay the same, even if supply and demand change in the future. O c profit seeking firms will push the price so high that eventually nobody will buy the good and the market will dissolve O d. if there is a shortage in a market, competition will make the price rise and the shortage will be eliminatedQUESTION 13 What are the problematic characteristics of forward contracts that have led to the emergence of futures contracts? QUESTION 14 Why does the risk of default arise in forward contracts? QUESTION 15 What is meant by the liquidity of a forward contract? QUESTION 16 Explain why forward contracts are used primarily for hedging, whereas futures contracts are used primarily for speculation. QUESTION 17 Distinguish between a currency swap and an interest swap.Question 1 The purpose of the American federal system of government is to: A, Ensure the property rights of the citizens of each state. O B. Recognize the need for a central government to deal with certain issues on behalf of all citizens of the nation. O c. Ensure that all states have the same laws. O D. Ensure full employment of federal public employees. Question 2 The U.S. Constitution regulates: O A. The power among the branches of the federal government. O B. Interaction of U.S. citizens with citizens of other countries. O c. State enforcement of day-to-day issues of state citizens. D. Private contracts between state citizens. Question 3 State legislation is intended to: A Be discriminatory to undocumented persons. O B. Express the rules for behavior passed by the elected representatives for the conduct of each state's citizens. O c. Provide guidance to federal courts. O D. Be unfair to certain citizens of the state. Question 4 The three branches of the U.S. Government are: O A Criminal, civil and legal. O B. Military, private and industrial. c. Judicial, legislative and executive. O D. Congress, senate and executive. Question 5 A contract of adhesion is: A One that has not been reduced to writing. B. One in which the object of the contract is illegal conduct. o c. One in which a stronger party is able to dictate terms to a weaker party. o D. Where a corporation forms an oral contract. Question 6 Construction contracts: O A Are usually unfair to one party- O B, May be considered a source of law by courts. O c. Are not commonly used in construction. O D. Are almost always altered by parties. Question 7 What is the difference between courts of general jurisdiction and those of limited jurisdiction?Question 3 ccounting theorists? Some researchers who utilise Legitimacy Theory posit that organisations will attempt to operate within the terms of their 'social contract'. What is a social contract? Question 4 In 2006 the Australian Government established an inquiry into corporate social responsibilities with the aim of deciding whether the Corporations Act should be amended so as to specifically include particular social and environmental responsibilities within the Act. At the completion of the inquiry it was decided that no specific regulations would be added to the legislation, and that instead, 'market forces' would be relied upon to encourage companies to do the 'right thing' (that is, the view was expressed that if companies did not look after the environment, or did not act in a socially responsible manner, then people would not want to consume the organisations' products, and people would not want to invest in the organisation, work for them, and so forth. Because companies were aware of such market forces they would do the 'right thing' even in the absence of legislation). You are required to explain the decision of the government that no specific regulation be introduced from the perspective of: 1. Public Interest Theory 2. Capture Theory 3. Economic Interest Group Theory of regulation.QUESTION 6 Albert entered into a contract under the name of one of his corporations. After consulting with his accountant regarding tax implications, he asked, and the other party agreed, to change the name of the company in that contract. What has transpired with respect to the contract between these parties? 0 a. amendment 0 b. novation O c. substitution 0 d. assignment QUESTION 7 Although Maybelle's insurance excluded coverage for jewelry loss, her insurer mistakenly sent her a cheque to compensate her for the loss of an expensive piece of jewelry. What legal doctrine might the insurer use to recover the money that was mistakenly paid to Maybelle? O a. misrepresentation O b. frustration O c. the duty to mitigate 0 d. unjust enrichment
