Using the quotes from the table above, an investor makes the following transactions:

(1) buys the stock at $55, and

(2) writes the December Call with a strike price of $55.

If the stock is selling for $62 per share, when the options expire, the profit from the trades is closest to a:
.

Multiple Choice

• $3.00 loss per share.

• $1.50 loss per share.

• $1.50 gain per share.

• $5.50 gain per share.

• $9.50 gain per share.

• $12.50 gain per share.

Price controls can be divided into two opposing categories: Price Ceilings and Price Floors. Lets discuss the need for controls and the effect on the efficient market. What would be the effects of using price controls to intervene in a "well functioning, competitive market"? Who are the "winners and losers" in price floors and ceilings? Give examples.

1.Suppose you are faced with the following spot rates:

y₁ = 9%

_y2 = 10%

_y3 = 11%

Now consider a bond with a $100 face value maturing in 3 years. The bond pays annual coupon payments at a 6% coupon rate. What is the bond price?

Select one:

a. $92.63

b. $87.97

c. $80.86

d. $85.49

e. $100

2.A bond will sell at a discount when

Select one:

a. the coupon rate is greater than the current yield, and the current yield is greater than yield to maturity.

b. the coupon rate is greater than yield to maturity.

c. the coupon rate is less than the current yield, and the current yield is greater than the yield to maturity.

d. the coupon rate is less than the current yield, and the current yield is less than yield to maturity.

e. None of the options are true.

1. Consider a consumer with 100 units of income that can be expended in books ( good 1) and other goods ( good 2). The prices of these goods are: p(1) = 1, and p(2) = 2.

1. (i) Write down - and make a picture- of the budget constrain of the consumer, and its budget set.
   ¿What is the economic interpretation of the slope of the budget constrain?.

2. (ii) Do the same as before when the income of the consumer increases up to 150 monetary units.

3. (iii) Supose that income is still 100 units, but the price of the good one is p ́(1) = 2. Do the same as in the case (i).

Consider the initial situation of the consumer. Supose that the goverment wants to stimulate people to read more. And to do that, the goverment consider the following policies.

(a) Subsidize with 25 monetary units to the consumer.

(b) Subsidize with 0.20 monetary units per book

(c) Givetotheconsumer25cuponsthatcanbeusedtobuy only books.

Moving to a small town, you get a job as a business analyst for ABC Coffee, which happens to operate the only caf6 in town. The demand for ABC's coffee is given as: Q : 100 - P, where P is the price (in cents) charged by ABC for a cup of coffee and Q is the quantity sold per day (i.e., cups per day). Furthermore, suppose total fixed cost encountered by ABC is zero, and marginal cost (MC) equals average variable cost (AVC), with both constant at 20 cents (i.e., MC : AVC :20 at all output levels). Lastly, given the demand for ABC's coffee, its marginal revenue is given by the following equation: MR : 100 - 2Q.

t1l Interested in maximizing ABC's profit, you should recommend that ABC sell _ cups of coffee per day.

A. 200

B. 80

C. 60

D. 40

Consider two countries, Spain and Italy, where the only two factors of production are capital and labor. Spain has 100 units of capital and 400 units of labor and Italy has 200 units of capital and 100 units of labor. Both countries produce two goods, cheese and suits. The labor share in total production costs is 75% for cheese but only 25% for suits. (2 points for each part)

A. Which country is labor abundant? Explain. ( very helpful if explained using numbers or graphs for the following quiestions)

B. Which good is labor intensive? Explain.

C. What will happen to the relative price of cheese in Italy when the two countries open up to trade?

D. What will happen to the wage to rental rate ratio in Italy after opening up to international trade?

E. What will happen to the labor to capital ratio in the Italian cheese sector?

Sheffield Corp. is a retailer operating in Calgary, Alberta. Sheffield uses the perpetual inventory method. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Sheffield for the month of January 2022.

For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. (Round answers to 0 decimal places, e.g. 125.)

1a. (NPV of Switching to a credit policy) Your company is evaluating a switch from a cash-only policy to a net 30 policy. The price per unit product is $49, and the variable cost per unit is $20. The company currently sells 100 units per month. Under the proposed policy, the company expects to sell 110 units per month. The company’s cost of capital for this line of business is 2% monthly. Assume that the possibility of nonpayment is small enough to ignore. What is the NPV of switching to a net 30 policy? Should the company switch?

1b. (NPV of Switching to a credit policy) Consider the same situation from the previous question, if the projected increase of sales from 100 units to 110 units is only an estimate, what increase in unit sales is necessary for the company to break even when switching to a net 30 policy.