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1. Emergency Medical's stock trades at $110 a share. The company is contemplating a 3-for-1 stock split. Assuming that the stock split will have no effect on the market value of its equity, what will be the company's stock price following the stock split?
2. Forrest Gump: “Lieutenant Dan got me invested in some kind of fruit company. So then I got a call from him, saying we don’t have to worry about money no more.” Seeing AAPL reached $635, Lieutenant Dan starts to worry. In the next 3 months, he wants to hold on to his 1000 shares, cut loss at $620, and own the shares if the price is $590 or lower. The most suitable strategy for him is:
(a) a long position in 3-month put on 1000 shares striking at 620 and ready to buy back the shares if the price drops to 590.
(b) a long position in 3-month bear spread on 1000 shares with strike prices of 590 and 620.
(c) a long position in 3-month bull spread on 1000 shares with strike prices of 590 and 620.
(d) a long position in 3-month call on 1000 shares striking at 620 and ready to buy back the shares if the price drops to 590.
Business risk
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