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Question
If the beta of Microsoft is 1.13, risk-free rate is 3% and the market risk premium is 8%, calculate the expected return for Microsoft.
A. 12.04%
B. 15.66%
C. 13.94%
D. 8.65%
Answer
This answer is hidden. It contains 33 characters.
Related questions
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Suppose VS's stock price is currently $20. In the next six months it will either fall to $10 or rise to $30. What is the current value of a put option with an exercise price of $15? The six-month risk-free interest rate is 5% (periodic rate).
A. $5.00
B. $2.14
C. $0.86
D. $7.86
Q:
Suppose Ralph's stock price is currently $50. In the next six months it will either fall to $30 or rise to $80. What is the option delta of a call option with an exercise price of $50?
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C. 0.600
D. 0.75
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A call option has an exercise price of $100. At the final exercise date, the stock price could be either $50 or $150. Which investment would combine to give the same payoff as the stock?
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B. Lend PV of $50 and sell two calls
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Briefly explain the term "option delta."
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Briefly explain risk-neutral valuation in the context of option valuation.
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Briefly explain why an option is always riskier than the underlying stock.
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A knock-in barrier option might be used if the investor is looking to reduce the cost of buying a call option.
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The binomial model is a discrete time model.
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Using the binomial model, what is the value of a three month option given the following data and assuming there are no time periods other than three months? The exercise price is $40; stock price is $46; the upside price is $48; the downside price is $34; the 3 month interest rate is 2%. The upside and down side have equal probabilities.
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Q:
The Black-Scholes OPM is dependent on which five parameters?
A. Stock price, exercise price, risk free rate, beta, and time to maturity
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C. Stock price, risk free rate, probability, variance and exercise price
D. Stock price, exercise price, risk free rate, variance and time to maturity
Q:
If the standard deviation of annual returns on the asset is 20% and the interval is half a year, then the downside change is equal to:
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23. If "u" equals the quantity (1 + upside change), then the quantity (1 + downside change) is equal to:
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B. -1/u
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Briefly explain how an option holder gains from the volatility of the underlying stock price.
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Define the term "put option."
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Define the term "call option."
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All things being equal, the closer an option gets to expiration, the lower the option price.
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What is SEC Rule 10b-18? Briefly explain.
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If you accept the dividend irrelevancy theory, it is possible to maintain a high dividend clientele and still fund future growth.
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Australia follows the imputation tax system.
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Dividend payments are used to change the capital structure by replacing equity with debt.
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B. Fall exactly by the amount of the dividend
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D. Cannot be predicted
Q:
One key assumption of the Miller and Modigliani (MM) dividend irrelevance argument is that:
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B. There are no capital gains taxes
C. All investments are risk-free
D. New shares are sold at a fair price
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Generally, investors view the announcement of open-market repurchase of stocks as:
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B. good news and the stock price increases
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Generally, investors interpret the announcement of a decrease in dividends as:
A. bad news and the stock price drops
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Generally, investors interpret the announcement of an increase in dividends as:
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B. good news and the stock price increases
C. a non-event and does not affect the stock price
D. very bad news and the stock price plunges