W08 Solution

W08 Solution - 1 FINANCE 401 RYERSON UNIVERSITY Final Exam...

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Unformatted text preview: 1 FINANCE 401 RYERSON UNIVERSITY Final Exam April 24, 2008 - SOLUTION Name:__________________________________ Student #:_______________________________ Professor:______________________________ _- Time allowed: 3 hours- Aids allowed: None except for an 81/2 by 11 double sided cheat sheet and a calculator- The exam is out of 60 marks. - There are 40 multiple choice questions. Each multiple choice question is worth 1 mark. - The remaining non-multiple choice questions are worth 20 marks. - Answer all multiple choice questions on the marksense sheet. - Answer all non-multiple choice questions in the space provided. - Please put your name, student number, and professors name on the front of this exam questionnaire AND at the top of the non-multiple choice section. - Print or write VERY NEATLY. If I cant read your writing, your answers wont get marked. 1. You buy 15 wheat futures contracts when the price is $2.61 per bushel (each contract is for 5,000 bushels). The price on the maturity date is $2.21. What is your payoff? a) -$30,000 b) -$2,000 c) $0 d) $2,000 e) $30,000 2. You sell 10 gold futures contracts when the futures price is $342.70 per ounce (each contract is for 100 ounces). The price on the maturity date is $302.30. What is your payoff? a)-$40,400 b)-$4,040 c) $404 d) $4,040 e) $40,400 3. You buy one futures contract for 5,000 bushels of soybeans with a settlement price of $6.92 per bushel. If the price is $7.58 per bushel at the contract expiration, what is your payoff? a)-$37,900 b)-$3,300 c) $2,130 d) $3,300 e) $37,900 1 4. You purchased a May American call option on Netscape stock with an exercise price of $165. Which of the following statements is true? a) You have the right to buy Netscape shares for $165 at any time prior to the option expiration, regardless of the stocks market price. b) You are obligated to buy Netscape shares for $165 when the option expires in May, regardless of the stocks market price. c) You have the right to sell Netscape shares for $165 at any time prior to the option expiration in May, regardless of the stocks market price. d) You are obligated to sell Netscape shares for $165 when the option expires in May, regardless of the stocks market price. e) You have the right to buy Netscape shares for $165 at any time prior to the option expiration in May, but only if the stocks market price is less than $165. Use the following information to answer the next SIX questions. Option OutTel Call Put Share Price Strike Exp. Vol. Last Vol. Last 25 20.0 Jan. 101 6 69 1 25 20.0 Feb. 79 7 54 2 25 22.5 Mar. 65 5 40 4 5. You want to purchase one February call contract option on the stock. The contract with a $20 exercise price will cost you _________. (Ignore transactions costs.) a) $100 b) $200 c) $500 d) $600 e) $700 6. What is the market value per share of the March call?...
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This note was uploaded on 09/26/2011 for the course FIN 401 taught by Professor Stevejoyce during the Fall '08 term at Ryerson.

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W08 Solution - 1 FINANCE 401 RYERSON UNIVERSITY Final Exam...

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