An increase in which of the following would increase the price of a call option on common stock, ceteris paribus? A Stock price (B) Stock price volatility Interest rates Exercise price E Time to expiration

A stock's internal rate of return (IRR) is the discount rate that cause the present value of future dividends and the price at which a stock is expected to be sold to equal the current price of the stock. O True O False C

What is not a variable in Boundary Conditions? a) underlying stock price at expiration b) exercise price c) time to maturity d) underlying stock price at Time=0 e) interest rate

Which of the following events are likely to increase the market value of a call option onan ordinary share? Explain.a) An increase in the stock price.b) An increase in the volatility of the stock price.c) An increase in the risk-free rated) A decrease in the time until the option expires

Which of the following statements true? A call option price is increasing in stock return volatility A put option price is decreasing in stock return volatility I. II. A) I. and II. are true B) I. is true and II. is false C) II. is true and I. is false D) I. and II. are false |

Describe the effect of a change in each of the following factorson the value of a call option: (1) stock price, (2) exercise price,(3) option life, (4) risk-free rate, and (5) stock return standarddeviation (i.e., risk of stock).

Describe the effect on a call option’s price that results from an increasein each of the following factors: (1) stock price, (2) strike price, (3) time toexpiration, (4) risk-free rate, and (5) standard deviation of stock return.

Astromet is financed entirely by common stock and has a beta of 1.20. The firm pays no taxes. The stock has a price-earnings multiple of 11.0 and is priced to offer a 10.9% expected return. The company decides to repurchase half the common stock and substitute an equal value of debt. Assume that the debt yields a risk-free 4.6%. Calculate the following: Required: a. The beta of the common stock after the refinancing b. The required return and risk premium on the common stock before the refinancing c. The required return and risk premium on the common stock after the refinancing d. The required return on the debt e. The required return on the company (i.e, stock and debt combined) after the refinancing If EBIT remains constant: f. What is the percentage increase in earnings per share after the refinancing? g-1. What is the new price-earnings multiple? g-2. Has anything happened to the stock price? Complete this question by entering your answers in the tabs below. Reg A to E Reg F to G2…

Under which of the following circumstances would you want to buy a stock? Select one: a. The HPR is greater than zero. b. A stock's holding period return is greater than the CAPM return c. A stock's CAPM return is greater than its holding period return d. The stock's price is higher than its value

The duration of a preferred stock is its maturity. OA. Greater than or less than, depending on its YTM OB. Less than OC. Greater than O D. Equal to