Call option: Personal finance problem   Carol Krebs is considering buying 100 shares of Sooner​ Products, Inc., at ​$61 per share. Because she has read that the firm will probably soon receive certain large orders from​ abroad, she expects the price of Sooner to increase to ​$65 per share. As an​ alternative, Carol is considering the purchase of a call option for 100 shares of Sooner at a strike price of $56. The​ 90-day option will cost ​$900. Ignore any brokerage fees or dividends.

a. What will​ Carol's profit be on the stock transaction if its price does rise to $65 and she​ sells?

b. How much will Carol earn on the option transaction if the underlying stock price rises to ​$65​?

c. How high must the stock price rise for Carol to break even on the option​ transaction?

d. ​ Compare, contrast, and discuss the relative profit and risk associated with the stock and option transactions.

Alpha company is producing chocolate bars and its average variable cost is given by the following equation: ???=0.5?2−24?+432.

3.1) If total fixed cost for the firm is 100, compute the total cost of producing chocolate bars for the firm.

3.2) Compute the number of chocolate bars that minimizes the average variable cost for the firm. What is the value of marginal cost at this point?

3.3) Assume that chocolate market is a perfectly competitive market and market price for chocolate is P=150. What do you think about profit (or loss) of Alpha company in the short run when market price is P=150?

3.4) Calculate the price for the shut-down point of Alpha company in the short-run (i.e. below which price Alpha company may shut down its plant?) Do you think Alpha company may shut- down its plant if market price is P=100?

1. Calculating inflation using a simple price index

Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2017, 2018, and 2019.

The cost of each item in the basket and the total cost of the basket are shown for 2017.

Perform these same calculations for 2018 and 2019, and enter the results in the following table.

Suppose the base year for this price index is 2017.

In the last row of the table, calculate and enter the value of the CSPI for the remaining years.

Between 2017 and 2018, the CSPI increased by

. Between 2018 and 2019, the CSPI increased by

.

Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply.

The quality and design of calculators improved dramatically from 2017 to 2019. For example, calculators made in 2019 accept memory cards, whereas those made in 2017 do not, but this quality change is hard to measure.

As the price of textbooks increased, more and more students turned to the used-book market or chose not to buy textbooks at all, instead using the copies on reserve in the library.

Professors required each student to buy 10 textbooks, regardless of the price.

A new, safe method of memory enhancement became available for purchase.

1. Calculating inflation using a simple price index

Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2017, 2018, and 2019.

The cost of each item in the basket and the total cost of the basket are shown for 2017.

Perform these same calculations for 2018 and 2019, and enter the results in the following table.

Suppose the base year for this price index is 2017.

In the last row of the table, calculate and enter the value of the CSPI for the remaining years.

Between 2017 and 2018, the CSPI increased by

. Between 2018 and 2019, the CSPI increased by

.

Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply.

A new mobile device for personal computing became available for purchase.

As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or on their computers.

Professors required each student to buy 15 notebooks, regardless of the price.

Energy drinks became increasingly popular on college campuses between 2017 and 2019 due to significant improvements in flavor, but this quality change is hard to measure.

Calculating inflation using a simple price index

Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2014, 2015, and 2016.

The cost of each item in the basket and the total cost of the basket are shown for 2014.

Perform these same calculations for 2015 and 2016, and enter the results in the following table.

___%

Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply.

a.) Professors required each student to buy 10 textbooks, regardless of the price.

b.)Energy drinks became increasingly popular on college campuses between 2014 and 2016 due to significant improvements in flavor, but this quality change is hard to measure.

c.)A new mobile device for personal computing became available for purchase.

d.)As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or on their computers.

XYZ stock price and dividend history are as follows:

Year     Beginning-of-year Price       Dividend paid at Year-End

2010           $100                                $4

2011           $110                                $4

2012           $90                                  $4

2013           $95                                  $4

Compute the standard deviation of stock return.

Maggie Kool buys an air conditioner with $100 down and 35 equal installments of $25. The total purchase price(cash price) is $600. If Maggie pay off the bill after the 23 payment. what rebate is Maggie entitled to and what will be the final payoff?