QUESTION 1

Ayn Rand believed that one should set one's own interests aside in order to be ethical.

True

False

2.5 points   

QUESTION 2

The outcome of the Good Samaritan Experiment was in support of the claims in virtue ethics

True

False

2.5 points   

QUESTION 3

For Kant, human have inherent dignity because they have the capacity to reason and discern right from wrong.

True

False

2.5 points   

QUESTION 4

Cultural relativism says that moral truth is universal.

True

False

2.5 points   

QUESTION 5

David Hume believed that sentiments got in the way of our moral decisions.

True

False

2.5 points   

QUESTION 6

Altruism is the opposite of egoism.

True

False

2.5 points   

QUESTION 7

Kant is a moral absolutist.

True

False

2.5 points   

QUESTION 8

Divine command theory says that God decrees what is right and wrong.

True

False

2.5 points   

QUESTION 9

Cultural relativism says that there is no such thing as universal truth in ethics.

True

False

2.5 points   

QUESTION 10

Betrand Russell believed that the universe is a cold, meaningless place, devoid of value and purpose.

True

False

2.5 points   

QUESTION 11

Plato's Symposium contains a discussion that askes whether conduct is right because the gods command it, or doe the gods command it because it is right?

True

False

2.5 points   

QUESTION 12

Virtue is a commendable trait of character manifested in habitual action.

True

False

2.5 points   

QUESTION 13

Simple subjectivism cannot account for moral disagreement.

True

False

2.5 points   

QUESTION 14

According to cultural relativism, it is wrong for Eskimos to eat their babies.

True

False

2.5 points   

QUESTION 15

Natural Law states that there is a rational order to the universe.

True

False

2.5 points   

QUESTION 16

The following is an example of an argument from nature (i.e. based on nature), the "purpose' of the eyes is to see, therefore it is wrong to use one's eyes to flirt.

True

False

2.5 points   

QUESTION 17

One of the problems with Natural Law theory is that it seems to confuse the "is" and "ought" distinction.

True

False

2.5 points   

QUESTION 18

The categorial imperative is central to virtue ethics.

True

False

2.5 points   

QUESTION 19

If you act out of duty, then you are following utilitarianism.

True

False

2.5 points   

QUESTION 20

Jeremy Bentham and Peter Singer have nothing in common.

True

False

2.5 points   

QUESTION 21

Ethical egoism says that we are born with self-interest.

True

False

2.5 points   

QUESTION 22

In utilitarianism the goal is to produce the greatest overall balance of happiness over unhappiness.

True

False

2.5 points   

QUESTION 23

Psychological egoism is the normative theory of ethics that says that the "right" thing to do is always self-interest.

True

False

2.5 points   

QUESTION 24

One of the problems with virtue ethics is making sense of situations wherein someone might be courageous in an unethical endeavor.

True

False

2.5 points   

QUESTION 25

The minimum conception of morality states that, at the very least, the effort to guide one's conduct by emotion--that is, to what there are the best feelings for doing--while giving equal weight to the interests of each individual affected by one's action.

True

False

2.5 points   

QUESTION 26

In all likelihood, John Stuart Mill would have support the argument for euthanasia based on utilitarianism.

True

False

2.5 points   

QUESTION 27

Moral consequences are important to Kant, but not Bentham.

True

False

2.5 points   

QUESTION 28

Ethical subjectivism says that morality is based on universal moral code.

True

False

2.5 points   

QUESTION 29

Virtue ethics says that moral character can determine ethical questions.

True

False

2.5 points   

QUESTION 30

An argument for the legalization of marijuana cannot be made using utilitarianism.

True

False

2.5 points   

QUESTION 31

One of the problems with divine command theory is that it seems to suggest that morality is arbitrary.

True

False

2.5 points   

QUESTION 32

"Way to go, Peyton!" is a factual statement and not an expression of the speaker's attitude.

True

False

2.5 points   

QUESTION 33

Thomas Hobbes believed that human nature was good and that we could get by without laws and police.

True

False

2.5 points   

QUESTION 34

Cowardliness is a lack of courage.

True

False

2.5 points   

QUESTION 35

The prisoner's dilemma is a thought experiment that supports the importance of social contract theory.

True

False

2.5 points   

QUESTION 36

John Mackie was an objectivist who believed in the power of facts in ethics.

True

False

2.5 points   

QUESTION 37

The benefits argument states, if we can benefit someone without harming anyone else, we ought to do so.

True

False

2.5 points   

QUESTION 38

Aristotle's Golden Mean says that virtue lies between two extremes (excess and deficiency).

True

False

2.5 points   

QUESTION 39

Kant believes that right actions are the ones that produce the most good.

True

False

2.5 points   

QUESTION 40

Kant was a Christian, but did not make an argument based on religious supposition.

True

False

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.

3. [10 marks] A sample survey of 54 discount brokers showed that the mean price charged for a

trade of 100 shares at $50 per share was $33.77 and a sample standard deviation of $15.

a.    [3] Develop a 95% confidence interval for the mean price charged by discount brokers for a trade of 100 shares at $50 per share.

b.    [2] Explain, in context, what the interval you found tells you.

c.     [3] What sample size would be necessary to achieve a margin of error of $2? Assume a

confidence level of 95%.

d.    [2] Three years ago the mean price charged for a trade of 100 shares at $50 per share was

$39.25. Has the price dropped significantly? Justify.

Problem 1: Properties of Options

The price of a European put that expires in six months and has a strike price of $100 is $3.59. The underlying stock price is $102, and a dividend of $1.50 is expected in four months. The term structure is flat, with all risk-free interest rates being 8% (cont. comp.) - Solutions explained please

1. What is the price of a European call option on the same stock that expires in six months and has a strike price of $100?
2. Explain in detail the arbitrage opportunities if the European call price is $6.1. How much will be the arbitrage profit?
3. Explain in detail the arbitrage opportunities if the European call price is $8.8. How much will be the arbitrage profit?

The price of a European put that expires in six months and has a strike price of $100 is $3.59. The underlying stock price is $102, and a dividend of $1.50 is expected in four months. The term structure is flat, with all risk-free interest rates being 8% (cont. comp.).

1. What is the price of a European call option on the same stock that expires in six months and has a strike price of $100? [1 marks]
2. Explain in detail the arbitrage opportunities if the European call price is $6.1. How much will be the arbitrage profit? [3.5 marks]
3. Explain in detail the arbitrage opportunities if the European call price is $8.8. How much will be the arbitrage profit? [3.5 marks]

A publisher is interested in the effects on sales of college texts that include more than 100 data files. The publisher plans to produce 20 texts in the business area and randomly choses 10 to have more than 100 data files. The remaining 10 are produced with at most 100 data files. For those with more than 100, first-year sales averaged 9254, and the sample standard deviation was 2107. For the books with at most 100, average first-year sales were 8167, and the standard deviation was 1681.

a. Assuming that the two population distibutions are normal with the same variance, at the 5% significance level, test the null hypothesis that the population means are equal against the alternative that the true mean is higher for books with more than 100 data files.

b. Assuming that the two population distibutions are normal with the same variance, find a 95% confidence interval for the difference between two population means.

B. MONOPOLY

A corporation buys up all the individual one-person businesses and operates them as one corporation. The individuals work for the corporation as employees. There is now one corporation (Washington Physical Therapy Company) providing this service to everyone in the metropolitan area.   Technology and the actual services do not change.

For the Corporation:

Fixed cost per day: $4,000 (this is 100 times $40)

Variable cost per day for the Company (travel, supplies, etc.) based on existing operations of all 100 employees:

$40 for the first 500 sessions in a day

                        $45 for the 600^th   to 699^th session in a day

                        $50 for the 700^th to 799^th session in a day

                        $60 for the 800^th to 899^th session in a day.

                        $70 for the 900 to 999^th session in a day.

1. Complete the cost schedule for the Company

2. On the Monopoly Graph at the end of this assignment, Graph the Marginal Cost (which is like a supply curve) and the Average Total Cost for the Company.

3. Graph the Demand Curve (Demand has not changed).

4. Determine the Total Revenue and the Marginal Revenue based on the Demand Schedule:

4. Graph the Marginal Revenue (at the quantity midpoint). E.g. graph $70 at a quantity of 150

5. Determine the profit maximizing level of output

6. What price will the company charge?

7. What will be the profit per unit (one physical therapy session) and the total company profit per day?

8. How does the price and quantity compare with the price and quantity before the industry became a monopoly?

9. Can we expect these profits to persist over time? Why or why not?

10. What are the implications for society?

Explain the concept of Put-Call Parity using both the formula and by plotting the payoffs as a function of the stock price.

b. Option traders often refer to “straddles” and “butterflies”. Straddle: buy call with exercise price of $100 and simultaneously by put with exercise price of $100. Butterfly: Simultaneously buy one call with exercise price of $100, sell two calls with exercise price of $110, and buy one call with exercise price of $120.

i. Draw position diagrams for the straddle and the butterfly, showing the payoffs from the investor’s net position.

ii. Each strategy is a bet on variability. Explain Briefly the nature of this bet.

c. A stock’s current price is $160, and there are two possible prices that may occur next period: $150 or $175. The interest rate on risk-free investments is 6% per period. Assume that a (European) call option exists on this stock having an exercise price of $155.

i. How could you form a portfolio based on the stock and the call so as to achieve a risk-free hedge?

ii. Compute the price of the call. iii. What would change if the exercise price was $180?

Jason is an investor who owns 1 share of XYZ and a sold a call option on 1 share of XYZ. The exercise price of the put option is $100 and XYZ currently trades at $99. The option premium was $3. If the price of XYZ at expiration is $50, the payoff of Jason’s position is:

-$3

$0

$100

$50

$99