Reference no: EM131473320

1) You sold four WXO 35 call option contracts at a quoted price of $.38. What is your net gain or loss on this investment if the price of WXO is $38.20 on the option expiration date?

a) $118

b) $-1,363

c) $-1,246

d) $1,363

e) $-1,128

f) Other, specify.

2) You are considering a project which has been assigned a discount rate of 6%. If you start the project today, you will incur an initial cost of $3,450 and will receive cash inflows of $2,070 a year for 2 years. If you wait one year to start the project, the initial cost will rise to $3,740 and the cash flows will increase to $2,506 a year for 2 years. What is the value of the option to wait?

a)  $611.42

b)  $461.00

c) $1,519.50

d)  $517.01

e)  $565.14

f) Other, specify.

3) Calculate the duration (in years) of a 4-year $1,000 face value bond, which pays 8% coupons annually throughout maturity and has a yield to maturity of 9%.

a) 3.29

b) 3.57

c) 3.69

d) 3.89

e) 4.00

f) Other, specify