Consider the Options on the Health Care Sector Index that are traded on the CBOE. Assume the current index value is 854.87.

Consider the September call option with a strike price of $850 which has an option premium of $81. Calculate the following:

1. Intrinsic value
2. Time value
3. Maximum gain if you are long the option
4. Maximum loss if you are long the option
5. At what index value would you earn zero profit if you exercise the option

Consider the September put option with a strike price of $850 which has an option premium of $72.50. Calculate the following:

1. Intrinsic value
2. Time value
3. Maximum gain if you are short the option
4. Maximum loss if you are short the option
5. At what index value would you earn zero profit if the option is exercised against you

Oil is a heavily traded commodity. The impact of oil on trade is immense and touches the economy of every country in the world. It is an economic resource and a geopolitical issue. Research and answer the following questions:

1. Where does the US get our oil from? How much of it is imported?

2. How does price impact your consumption? Relate it to opportunity costs.

3. How does price drive production? Research how speculation plays into the price?

4. Without Government incentives and with the price of gas low...Will people stop buying hybrids? The government played a big role in this by creating higher standards and financing some developments – is this good or bad (why?). Is it time to get rid of the incentives?

5. What about fracking-should we do it? What about the environmental stand point? Should the potential harm to the environment be calculated into the cost?

1) An negative feature of Exchange Traded Funds (ETFs) is:

A. the price of the fund may not match the Net Asset Value

B. the investor has less control over tax implications of trading than with a mutual fund

C. ETFs charge higher fees to investors than mutual funds

D. none of the above

2) An negative feature of mutual funds is:

A. the price of the fund may not match the Net Asset Value

B. the investor has less control over tax implications of trading than with an ETF

C. mutual funds typically have very high beta

D. none of the above

3) An attractive feature of mutual funds is:

A. the price of the fund always matches the Net Asset Value

B. the investor has more control over tax implications of trading than with a mutual fund

C. mutual funds typically charge lower fees to investors than ETFs

D. mutual funds consistently produce positive alphas

4) When we analyze the performance of an actively managed mutual fund we find that the fund generated a beta of 0.5 and an alpha of -1%.

A. this result shows that the manager took relatively low risk when investing

B. the alpha reported is good, considering the level of risk taken

C. both (A) and (B) are true

D. none of the above

5) A negative alpha for a mutual fund means:

A. the fund invested in assets which were below average levels of risk

B. the fund manager’s returns were lower than expected

C. the fund’s shares decreased in value during the period being analyzed

D. all of the above

6) An index fund should _______ for us to conclude that it performed well.

A. have a positive alpha

B. have a beta significantly greater than 1

C. have a beta equal to 1.

D. have an alpha equal to 0.

7) When we analyze the performance of an actively managed mutual fund we find that the fund generated a beta of 1.5 and an alpha of 2%.

A. the alpha is low, considering the high risk that was taken

B. this result shows that the manager did not add any value to performance with his/her decision-making

C. both (A) and (B) are true

D. none of the above

Debbie's Dance Studio is an incorporated business run by Debbie Star. During its first month of operations, the following transactions occurred:

1. Debbie starts the business by investing cash of $7,000 and $1,400 in supplies in exchange for $8,400 in company shares.

2. Debbie's Dance Studio reached an agreement with the local school to provide dance lessons for $1,400 a month, starting next month.

3. Debbie's Dance Studio purchased audio equipment for $2,200, on account.

4. Debbie's Dance Studio billed customers $2,000 for dance lessons, with 80% received in cash and the rest charged on account .

5. Debbie's Dance Studio received a $5,000 loan from her aunt

6. Debbie's Dance Studio paid $300 cash for supplies.

7. Debbie's Dance Studio collected the amount owing from customers billed in #4.

8. Debbie's Dance Studio paid $1,000 cash to pay down the amount owing from #3.

9. Debbie's Dance Studio received $1,400 advance payment from the local school, for dance lessons to be given next month.

10. Debbie's Dance Studio paid $1600 cash to rent studio space for the current and subsequent months.

Using the table provided here, show how each transaction affects the accounting equation.

1.) A chain of appliance stores, APP Corporation, purchases inventory with a net price of $450,000 each day. The company purchases the inventory under the credit terms of 1/15, net 40. APP always takes the discount but takes the full 15 days to pay its bills. What is the average accounts payable for APP? Round your answer to the nearest dollar.

2.)

Snider Industries sells on terms of 2/10, net 35. Total sales for the year are $600,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 40 days after their purchases. Assume a 365-day year.

1. What is the days sales outstanding? Do not round intermediate calculations. Round your answer to the nearest whole number.

     days

2. What is the average amount of receivables? Do not round intermediate calculations. Round your answer to the nearest dollar.

   $  

3. What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers paid on the 35th day? Do not round intermediate calculations. Round your answer to the nearest dollar.

3.)

1. 3/10, net 45.

     %

2. 2/10, net 45.

     %

3. 2/15, net 35.

     %

A normal distribution has μ = 32 and σ = 5.

(a) Find the z score corresponding to x = 27.

(b) Find the z score corresponding to x = 45.

(c) Find the raw score corresponding to z = −3.

(d) Find the raw score corresponding to z = 1.3.

1. The Cosmic Microwave Background and Prizewinning Cosmology

(a) How can we see the CMB if the photons were released 14 billion years ago? Shouldn't those photons be billions of light years away by now?

(b) Who was awarded the 2006 Nobel Prize for Physics? What was the prize for-- what were the results, and how were they obtained?

(c) Why are these results from part (b) important?

1. The Cosmic Microwave Background and Prizewinning Cosmology

(a) How can we see the CMB if the photons were released 14 billion years ago? Shouldn't those photons be billions of light years away by now?

(b) Who was awarded the 2006 Nobel Prize for Physics? What was the prize for-- what were the results, and how were they obtained?

(c) Why are these results from part (b) important?

Given the year end prices of the following stocks, estimate the standard deviation of the returns of a portfolio of 30% AAA and 70% BBB. Enter your answer as a percent without the % sign. Round your final answer to two decimals.