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Question
Which of the following statements is true?A) A call option is said to be out-of-the-money if the underlying stock is selling above the exercise price of the option.
B) A put option is said to be in-the-money if the underlying stock is selling below the exercise price of the option.
C) A put option is said to be out-of-the-money if the underlying stock is selling below the exercise price of the option.
D) A call option is said to be in-the-money if the underlying stock is selling below the exercise price of the option.
Answer
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Related questions
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A new forklift under consideration by Home Warehouse requires an initial investment of $100,000 and produces annual cash flows of $50,000, $40,000, and $30,000. Which of the following will not change if the required rate of return is increased from 10% to 12%.
A) The net present value.
B) The internal rate of return.
C) The profitability index.
D) The modified internal rate of return.
Q:
Initial Outlay Cash Flow in Period
1 2 3 4
-$4,000 $1,546.17 $1,546.17 $1,546.17 $1,546.17
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A) 10%.
B) 18%.
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Dieyard Battery Recyclers is considering a project with the following cash flows:
Initial outlay = $13,000
Cash flows: Year 1 = $5,000
Year 2 = $3,000
Year 3 = $9,000
If the appropriate discount rate is 15%, compute the NPV of this project.
Q:
The equivalent annual cost method is most appropriate in which of the following situations? In each case, assume that several mutually exclusive options are available.
A) Introducing a new product line
B) Adding another store to a chain of retail stores
C) Installation of federally mandated safety equipment
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Q:
WSU Inc. has various options for replacing a piece of manufacturing equipment. The present value of costs for option Ell is $84,000. Option Ell has a useful life of 5 years; annual operating costs were discounted at 9%. What is the equivalent annual cost?
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B) project BE.
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The size of capital investments and the difficulty in reversing them once they are made make capital-budgeting decisions very important to the firm.
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B) $15
C) $20
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P/E ratios found in published sources or on the internet are always computed by dividing the next period's expected earnings into the current price of the stock.
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B) 36%.
C) 7.6%.
D) 5.5%.
Q:
If the ROE on a new investment is less than the firm's required rate of return:
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B) the investment leaves the firm's value unchanged.
C) the effect on the firm's value is unpredictable.
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Q:
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B) rise.
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D) there is not enough information.
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B) 14.
C) 2.14.
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Draper Company's common stock paid a dividend last year of $3.70. You believe that the long-term growth in the dividends of the firm will be 8% per year. If your required return for Draper is 14%, how much are you willing to pay for the stock?
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Dividend payout ratios are generally much lower for small or newly established firms than for large, publicly owned firms.
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The dividend declaration date is the date at which the stock transfer books are to be closed for determining the investor to receive the next dividend payment.
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The ________ designates the date on which the stock transfer books are closed in regard to a dividend payment.
A) declaration date
B) ex-dividend date
C) date of record
D) payment date
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Five years ago, Mr. Martinez purchased 1000 shares of JPM stock at $50 per share. If Mr. Martinez ' tax rate is 25% would he prefer that the company pay a $5.00 per share dividend or offer to repurchase 100 shares at $50 per share?
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C) 45%.
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A) Common stock
B) Additional paid-in capital
C) Retained earnings
D) All of the above
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B) EPS will increase by 10%.
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D) EPS will decrease by 10%.