Bridget has a budget at $100 and consumes only wine and cheese; her current consumption choice is 6 bottles of wine and 10 pounds of cheese. The price of wine is $10 per bottle, and the price of cheese is $4 per pound. The last bottle of wine added 50 units to Bridget’s utility, while the last pound of cheese added 30 units to her utility.

a. Is Bridget making the utility- maximizing choice? Why or why not?

b. If not, what should she do instead? Why?

You bought 500 shares of GNX Ltd for $98.00 per share in May 2020. You are now worried about the market turning bearish, so you decide to buy 5 put options on the company's shares with each contract written on 100 shares at an exercise (or strike) price of $100.00 expiring in August 2020 for a premium of $3.00 per share. If at expiration the company's share price is $80.00 calculate the total profit or loss on your hedged position. Show all calculations.

Consider the following three bonds:

Which bond will most likely experience the smallest percentage change in price if the market discount rate for all three bonds increases by 100 basis points? Explain your logic in 2-4 sentences. Show Calculations and Formulas of how you arrived to this answer.

Pfender Guitars has a current annual cash dividend policy of $5.00. The price of the stock is set to yield a return of 9​%. What is the price of this stock if the dividend will be paid

a.  for 10 years and then the company repurchases the stock for $30?

b.  for 13 years and then the company repurchases the stock for $30?

c.  for 40 years and then the company repurchases the stock for $30​?

d.  for 60 years and then the company repurchases the stock for $30?

e.  for 100 years and then the company repurchases the stock for $30?

f.   forever with no repurchase of the​ stock?

Singing Fish Fine Foods has a current annual cash dividend policy of ​$2.00. The price of the stock is set to yield a return of 12%. What is the price of this stock if the dividend will be paid

a. for 12 ​years? $________ ​(Round to the nearest​ cent.)

b. for 16 ​years? $________ ​(Round to the nearest​ cent.)

c. for 42 ​years? $________ ​(Round to the nearest​ cent.)

d. for 50 ​years? $________ ​(Round to the nearest​ cent.)

e. for 100 ​years? $________ ​(Round to the nearest​ cent.)

f. forever? $________ ​(Round to the nearest​ cent.)

1. Suppose that firm B makes rugs and that its fixed costs are 10,000 per month. The Average Variable cost is $100 per rug. Suppose that it get a price of $500 per rug. How many rugs does the firm have to sell to breakeven?

2.Draw a graph of a firm in perfect competition making a profit. Be sure to include the ATC,AVC, MC, and MR curves. Identify the quantity and price where they would maximize their profit. Show the area of the profit on the graph.

Suppose that the demand curve for barley can be characterized by the equation P = 100 - 2Qd. Suppose further that price was $10.00 and a $10.00 tax is imposed on the market. a) How many barleys would be purchased at a price of $10.00? After tax? b) What is the amount of tax revenue generated by the tax? c) How much excess burden is generated by the tax? d) What is the amount of consumer surplus before and after the tax? What is the difference in consumer surplus? Is it equal to excess burden plus the tax revenue?

1.   Given the following system equations of price (P) and quantity (Q) determination in a widget market:

SHOW ALL WORK!

Demand: Q = 100 - 4P + 2G …..(1)      

Supply:    Q= 60 + 10P – 3N ……(2)

Where the price of substitute good, G = 10, and the cost of production N = 8.

1-a) by using the repeated substitution method only, please find equilibrium P and Q.

1-b) if G is up by 2, shows the impact of changing N on P and Q.

A 2-step binomial tree is used to value an American put option with strike 104, given that the underlying price is currently 100. At each step the underlying price can move up by 20% or down by 20% and the risk-neutral probability of an up move is 0.55. There are no dividends paid on the underlying and the discretely compounded risk free interest rate over each time step is 2%. What is the value of the option in this model? A. 11.82 B. 12.33 C. 12.49 D. 12.78

Below is the current limit order book for Intel stock. Answer the following questions. Treat each question independently.

A. If you place a market order to buy 100 shares of Intel, at what price and quantity will your order be executed? (0.5 pts)

B. If you place a limit sell order for 17300 shares of Intel at the price of $23.15, at what price and quantity will your order be executed? (0.5 pts)

C. If you place a limit buy order for 20,000 shares of Intel at the price of $23.17, at what price and quantity will your order be executed? (0.5 pts)