Reference no: EM133227550

1. One of the list below include ONLY the variables that are required by the Black Scholes model (it may not list all the variables required by the model however). Identify the list.

a. Risk-free interest rate, current stock price, current bond price

b. Purchase date, risk-free interest rate, current stock price

c. Risk-free interest rate, strike price, the expected return on the stock

d. Strike Price, Risk-free interest rate, current stock price, Exercise date

e. Exercise date, Strike Price, Risk-free interest rate, current stock price

2. Imagine we can only form the portfolios of risky stocks (correlation of one stock to any other stock is less than 1) and cannot include risk-free asset, which of the following will be true?

a. There will be only one efficient portfolio

b. There will be infinite efficient portfolios

c. It will depend on the correlations among the risky stocks

d. It will depend on the covariance among the risky stocks

e. There will be no efficient portfolio

3. When managers initiate philanthropy, the Corporate Social Responsible act can decrease firm value due to what reasons:

a. Agency Issues

b. Hubris Hypothesis

c. Empire Building

d. None of the above

e. All of the above