1) Who benefits from price discrimination? In order for price discrimination to work producers must be able to do what?

2) Describe your plan to reduce asymetric information in buying a house, car, insurance policy or choosing a college to apply to.

3) What are the benefits and shortcomings of Monopoly?

Need help with these 3 questions.

1. Black-Scholes option pricing

Suppose the stock price is 50 and we need to price a call option with a strike of 55 maturing in 2 months. The stock is not expected to pay dividends. The continuously compounded risk-free rate is 3%/year, the mean return on the stock is 7%/year, and the standard deviation of the stock return is 30%/year.

1. What is the N(d1) and N(d2)?
2. What is the price of the call option?
3. What is the price of a put option with the same features?

Profitability Ratios, Im having understanding the price to earnings ratio,

Can you explain the Price to earnings Ratio?

What does it mean when the price to earnings ratio is 10?

What does it mean that a company is overvalued or undervalued and how do you determine that?

1. Differentiate between price ceiling and price floor in a tabular form with any five differences along with two examples each.

Choose T/F for the following:

(a) Gamma measures the option price change when the stock price increases.

(b) Vega measures the change in the option price when there is an increase in volatility.

(c) Theta measures the change in the option price when there is an increase in the time to maturity.

(d) Rho measures the change in the option price when there is an increase in the interest rate.

(e) For a call option, delta is not negative.

(f) Delta for an option is smaller than 1.

(g) For a put option, vega is not negative.

(h) Vega tends to be greater for at-the-money options than deep out-of-the money options.

(i) For a call option, rho is not positive.

(j) For a call option, psi is not positive.

Why does a price ceiling create a black market? Why does a price floor create a grey

market?

A. Fill in the blank:

B. Find the index return for a price-weighted index (round to nearest percent ex: 54.7%>>55%) :

C. Find the index return for a value-weighted index (round to nearest percent ex: 54.7%>>55%) :

D. Find the index return for a equally-weighted index (round to nearest percent ex: 54.7%>>55%) :

1) Explain why rent control is an example of a price ceiling.

2) Explain why price ceilings can lead to shortages in terms of supply and demand.

3) Explain the concept of consumer surplus and producer surplus. What effect does rent control have on consumer surplus and producer surplus?

4) Are you an opponent or proponent of rent control? Provide reasons for your stance.

Cove’s Cakes is a local bakery. Price and cost information follows:

Required:

1. Calculate Cove’s new break-even point under each of the following independent scenarios:

a. Sales price increases by $1.70 per cake.

b. Fixed costs increase by $460 per month.

c. Variable costs decrease by $0.44 per cake.

d. Sales price decreases by $0.20 per cake.

2. Assume that Cove sold 420 cakes last month. Calculate the company’s degree of operating leverage.

3. Using the degree of operating leverage, calculate the change in profit caused by a 6 percent increase in sales revenue.

• Required 1
• Required 2
• Required 3

Calculate Cove’s new break-even point under each of the following independent scenarios: (Round your answers to the nearest whole number.)
a. Sales price increases by $1.70 per cake.
b. Fixed costs increase by $460 per month.
c. Variable costs decrease by $0.44 per cake.
d. Sales price decreases by $0.20 per cake.

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• Required 2
• Required 3

Assume that Cove sold 420 cakes last month. Calculate the company’s degree of operating leverage. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

• Required 3

Using the degree of operating leverage, calculate the change in profit caused by a 6 percent increase in sales revenue. (Round your intermediate values to 2 decimal places. (i.e. 0.1234 should be entered as 12.34%.))