Question

2.) You believe that a stock currently selling for$50 a share should sell for $60.00 a share. An at-the-money call option (the exercise price equals the market price) sells for $3 per share and an at the money Put option sells for $2.50 per share. In which option should you invest. Now say that he actual price ended up being $54.00. Was there a better choice? Did you make the right choice?

3.) What is the money market all about? You purchased a 91 day United States T-bill on February 1st for $99,000 and sold it on April 1st for $99,500. What was your annualized return?

4.) A 20 year United States Treasury bond has a market rate of interest of 4 percent and a coupon rate of 4 percent. What is its price? A 20 year AAA corporate bond has a market rate of interest of 6 percent and coupon rate of 6 percent. What is its price? Which bond is more risky? Now say that both the market rate of the Treasury security and the corporate bond rise by 1 percent, what is the new price of each bond. Comment.

5.) The United States economy grew by 2.3 percent in 2019 and the European economy grew by 1.0 percent. Based on this data, what happened to the value of the dollar compared to the Euro. Explain   

Answer 1