Questions from General Investment

Q: A stock trades for $45 per share. A call option

A stock trades for $45 per share. A call option on that stock has a strike price of $50 and an expiration date one year in the future. The volatility of the stock’s return is 30%, and the risk-free ra...

Q: Repeat the analysis of problem 14.17 assuming that the volatility

Repeat the analysis of problem 14.17 assuming that the volatility of the stock’s return is 40%. Intuitively, would you expect this to cause the call price to rise or fall? By how much does the call pr...

Q: Look at the Facebook option quotes in Figure 14.1,

Look at the Facebook option quotes in Figure 14.1, and focus on the call and put options with a strike price of $80. Can you use put-call parity to infer what the market price of Facebook stock must h...

Q: Describe the services that professional investment advisors perform, how they are

Describe the services that professional investment advisors perform, how they are regulated, online investment advisors, and the cost of investment advice.

Q: Repeat the analysis of problem 14.7, but this time

Repeat the analysis of problem 14.7, but this time focus on the Facebook call and put options in Figure 14.1 that have a strike price of $87.50. If you use put-call parity to find the price of Faceboo...

Q: Not long ago, Vanessa Woods sold her company for several million

Not long ago, Vanessa Woods sold her company for several million dollars. She took some of that money and put it into the stock market. Today Vanessa’s portfolio of bluechip stocks is worth $3.8 milli...

Q: An American currency speculator feels strongly that the value of the Canadian

An American currency speculator feels strongly that the value of the Canadian dollar is going to fall relative to the U.S. dollar over the short run. If he wants to profit from these expectations, wha...

Q: With regard to futures options, how much profit would an investor

With regard to futures options, how much profit would an investor make if she bought a call option on gold at 7.20 when gold was trading at $482 an ounce, given that the price of gold went up to $525...

Q: Taryn Arsenault is a regular commodities speculator. She is currently considering

Taryn Arsenault is a regular commodities speculator. She is currently considering a short position in July oats, which are now trading at 248. Her analysis suggests that July oats should be trading at...

Q: Briefly explain how behavioral finance can affect each of the following:

Briefly explain how behavioral finance can affect each of the following: a. The trading activity of investors b. The tendency of value stocks to outperform growth stocks c. The tendency of stock price...