The risk-free rate of return (r) is 2% and the expected market rate of return (rm) is 10%. The shares A, B and C all pay a dividend (D) of $6 a year. The betas for the shares are: A = 0.2; f = 1.0; and ?c = 1.8. The shares are all trading at the same price (P) of $60. Requirements. Answer the following questions: Q1. What are the expected returns on A, B and C?

You are examining three different shares. Share A has expected return 8.40%, beta 1.46, and volatility 27.00%. Share B has expected return 1.40%, beta -0.04, and volatility 33.00%. Finally, share C has expected return 5.90%, beta 1.00, and volatility 14.00%. The risk free rate is 1.30%, while the market price of risk is 5.10%. According to the CAPM, which share is undervalued?     A     B     C     None of the shares is undervalued

The current market price for common shares of Delta Company is $30. Call options on these shares currently trade at $2.35, and come with a $46.35 exercise price. If the stock’s market price rose to $51 what would be the percentage rate of return?   give a rounded number looking like this 100.4 that is not the right answer

Use the Black Scholes formulas and Excel (to avoid rounding errors in the final answers) to answer this question. Consider an option on a non-dividend-paying stock when the stock price is $44, the exercise price is $40, the risk-free interest rate is 6%, the volatility is 28% per annum, and the time to maturity is 4 months. (a) Find N(d1), enter answer to 3 decimal places. (b) Find N(d2),, enter answer to 3 decimal places. (c) What is the price of the option if it is a European call? Round answer to 3 decimal places. (d) What is the price of the option if it is a European put? Round answer to 3 decimal places.