HW3 - Name _ _ _ Homework # 3 FIN 4504 Equity and Capital...

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A. Gubin Homework 3, FIN4504 1 Name ____________________________ ____________________________ ____________________________ Homework # 3 FIN 4504 Equity and Capital Markets A. Gubin Due Date: Wednesday, December 2, 2009 at the beginning of class Answer all questions. I will check to make sure that you make an honest attempt to answer all questions, and then I will formally grade five of the multiple choice questions and a few of the remaining problems. You may work in groups of up to three people, and only one copy of the assignment should be turned in. If you work in groups, please list who you worked with. Multiple Choice (Circle the best answer) 1. It may be advantageous to exercise a put option early if _______________. a. the option is sufficiently in the money b. the option is at the money c. the option is sufficiently out of the money d. the intrinsic value is low enough 2. Most professionally managed equity funds ___________________. a. outperform the S&P 500 index on both raw and risk-adjusted return measures b. outperform the S&P 500 index on raw return measures and underperform the S&P 500 index on risk-adjusted return measures c. underperform the S&P 500 index on both raw and risk-adjusted return measures d. underperform the S&P 500 index on raw return measures and outperform the S&P 500 index on risk-adjusted return measures 3. For the Black-Scholes model, the stock’s standard deviation should be stated on ___________. a. an annual basis b. a weekly basis c. the same basis as the expiration date d. the same basis as the risk-free rate e. the same basis as the stock’s expected rate of return 4. Which of the following statements is false? Assume Black-Scholes holds and the stock pays no dividends.
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This note was uploaded on 12/03/2009 for the course FIN 4504 taught by Professor Banko during the Fall '08 term at University of Florida.

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HW3 - Name _ _ _ Homework # 3 FIN 4504 Equity and Capital...

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