A stock has a Beta of 1.5, the risk free rate is 3%, and the expected market ret

Question

A stock has a Beta of 1.5, the risk free rate is 3%, and the expected market return is 8%. What is the expected return on the stock?

a.10.5%

b.11.0%

c.15.0%

d.16.5%

One week before expiration, a call option with a strike of $50 is selling for $3 when the current stock price is $52. You buy the option and then sell it for $1 two days later.

The premium when you bought the option was $1.
The stock most likely declined over your two day holding period.
You lost $200 in this transaction.

Which of the following is correct?

a.Only I is true

b.Only I and III are true

c.Only II and III are true

d.All three are true

Farmer Brown, a wheat farmer, shorts wheat futures contracts at $750 per bushel in an amount equal to his expected crop production.

a.Farmer Brown is hedging against a drop in the price of wheat below $750 per bushel.

b.Farmer Brown will make additional money if the price of wheat is $800 per bushel.

c.If the price of wheat is $600 per bushel at time of delivery, Farmer Brown has lost money in total.

d.If the price of wheat falls to $600 per bushel, Farmer Brown will need to post additional margin.

ABC Mutual Fund has an investment objective is to provide long-term growth of capital by investing primarily in common stocks of issuers located in the U.S. with a record of above-average long-term growth. ABC Mutual Fund would be considered:

a.An Emerging Markets Fund

b.An Income Fund

c.An S&P ETF

d.A Growth Fund

A Company has a qualified pension plan in which it pays a percentage of an employee

Explanation / Answer

1. d

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