Q1. The price of a stock is $40. The price of a 1-year European put option on the stock with a strike of $30 is quoted as $7 and the price of a 1-year European call option on the stock with a strike of $50 is quoted as $5. Suppose that an investor buys 100 shares, shorts 100 call options, and buys 100 put options. Draw a diagram illustrating how the investor’s P&L varies with the stock price over the next year.

Q2. Stock in CP Inc. is currently priced at $50 per share. A call option with a $50 strike and 90 days to maturity is quoted at $1.95. Compare the percentage gains and losses from a $97,500 investment in stock versus the option in 90 days for stock prices of $40, $50, and $60.

Iconic memory is a type of memory that holds visual information for about half a second (0.5 seconds). To demonstrate this type of memory, participants were shown three rows of four letters for 50 milliseconds. They were then asked to recall as many letters as possible, with a 0-, 0.5-, or 1.0-second delay before responding. Researchers hypothesized that longer delays would result in poorer recall. The number of letters correctly recalled is given in the table.

Delay Before Recall

0 0.5 1

5 5 5

10 6   2

7 9 6

6 3 4

10 5 2

10 8 5

(a) Complete the F-table. (Round your values for MS and F to two decimal places.)

Source of Variation SS    df MS F

Between groups ____. ____. ____. ___

Within groups (error) ____. _____. ____

Total _____. _____

(b) Compute Tukey's HSD post hoc test and interpret the results. (Assume alpha equal to 0.05. Round your answer to two decimal places.)

The critical value is for each _______. pairwise comparison.

Which of the comparisons had significant differences? (Select all that apply.)

___ Recall following no delay was significantly different from recall following a half second delay.

____Recall following no delay was significantly different from recall following a one second delay.

_____Recall following a half second delay was significantly different from recall following a one second delay.

______The null hypothesis of no difference should be retained because none of the pairwise comparisons demonstrate a significant difference.

Iconic memory is a type of memory that holds visual information for about half a second (0.5 seconds). To demonstrate this type of memory, participants were shown three rows of four letters for 50 milliseconds. They were then asked to recall as many letters as possible, with a 0-, 0.5-, or 1.0-second delay before responding. Researchers hypothesized that longer delays would result in poorer recall. The number of letters correctly recalled is given in the table.

(a) Complete the F-table. (Round your values for MS and F to two decimal places.)

(b) Compute Tukey's HSD post hoc test and interpret the results. (Assume alpha equal to 0.05. Round your answer to two decimal places.)

The critical value is _____ for each pairwise comparison.

Which of the comparisons had significant differences? (Select all that apply.)

a) The null hypothesis of no difference should be retained because none of the pairwise comparisons demonstrate a significant difference.

b) Recall following a half second delay was significantly different from recall following a one second delay.

c) Recall following no delay was significantly different from recall following a half second delay.

d) Recall following no delay was significantly different from recall following a one second delay.

You are analyzing the following two projects and have developed the following information.

Project A | Project B

Year | Cash flow | Cash flow

0 | -$50,000 | -$50,000

1 | $31,000 | $42,000

2 | $26,000 | $21,000

3 | $27,000 | $18,000

5. What is the crossover rate of the two projects?

6. Project A and B are mutually exclusive. Which project(s) should be chosen if the required return is 8%? Why?

7. Project A and B are independent. Which project(s) should be chosen if the required return is 8%? Why?

Suppose you are given the following prices: Current stock price is $42. One month maturity Call(X=40)=$4.5, Two month maturity Call(X=40)=$3. All options are American type. Is there a profit opportunity based on these prices? If so, what would you do? If not, why not?

A team of three workers namely Aziz, Ambiga, and Ah Meng work for Zig Zag Timber Sdn. Bhd. In general, they involved in operating a jigsaw cutting machine and a sandpaper machine. Their work includes loading wood panels onto the machine, cutting the wood, shaping the wood according to the design, unloading the cut wood and smoothing the wood surface. They also need to repair and maintain the machine regularly as well as to change the blades and the sandpaper. Aziz, aged 50 is the most senior among them but recently had vision problem due to his diabetes. Ambiga is 45 years old and known to be very cheerful among his colleagues, but his wife sudden death in 2017, had caused him to depress and lost his focus on the job. Ah Meng who is 28 years old, is the youngest among them and due to his lack of experience he frequently made mistakes that brought down the whole team’s productivity. Each of the workers had experienced an accident at the workplace. The most severe accident happened to Aziz who lost one-third of his middle finger due to malfunction of the wood cutting machine.

(a) Based on the above scenario, discuss the causes of work-related accidents by considering the following elements:

i. the task to be done

ii the working conditions

iii. the employees’ characteristics

(b) Describe two actions that Zig Zag Timber Sdn Bhd. may take to protect the above-mentioned workers and promote safety and health in the workplace?

The politicians in the federal government were trying to look good in the next election. So they targeted a well-known national monopoly and raised the tax rate specifically on the profits of that monopoly. The tax rate was raised from 21 percent to 50 percent. The politicians were so proud of what they did and they started to brag in public that they were helping the people. Question: Will the monopoly truly lose that extra money that they paid in taxes and will they have no way to get it back?

• This type of profits tax is illegal in America. The government only has two choices. Either leave the monopoly alone or try to break them up into smaller firms.

• The monopoly won't be able to recover. All the extra taxes that were paid is lost. The monopoly will never be able to recover that lost money ever again.

• This is false because a smart monopoly would cut prices in order to sell more and make enough revenues to pay any additional taxes and they would still be able to effectively maintain their MC = MR profit maximization.

• This is false - the monopoly can almost always raise prices and will lose nothing or almost nothing in terms of profits because they have an inelastic demand curve.

*PLEASE PROVIDE ALL SOLUTIONS USING MICROSOFT EXCEL WITH ANY RELEVANT FORMULAS, thank you!*

You are an analyst in charge of valuing common stocks. You have been asked to value two stocks. The first stock AB Inc. just paid a dividend of $4.50. The dividend is expected to increase by 60%, 40%, 30% and 10% per year respectively in the next four years. Thereafter the dividend will increase by 4% per year in perpetuity.

The second stock is CD Inc. CD will pay its first dividend of $8 in 5 years. The dividend will increase by 40% per year for the following 3 years after its first dividend payment. Thereafter the dividend will increase by 3% per year in perpetuity.

Both stocks have a required rate of return of 25% per year for the next 2 years, and thereafter the required rate of return will be 10%.

1. Calculate AB’s expected dividend for t = 1, 2, 3, 4, and 5.
2. What is the current price of AB?
3. Calculate CD’s expected dividend for t = 1, 2, 3, 4, 5, 6, 7, 8 and 9.

What is the current price of CD?