1. A put option on a stock is said to be out-of-the-money if a. the exercise price is higher than the stock price b. the exercise price is lower than the stock price c. the exercise price is equal to the stock price d. the price of the put is higher than the price of the call.
2. Chukker Farm Polo has 15 year maturity bonds that were issued six years ago at a coupon rate of 5.6 percent. The bonds make semi-annual payments. If the YTM on these bonds is 5.7 percent, what is the current bond price?
3. The expected return on the market portfolio is 8.4%, while treasury bills are yielding 2.1%. What expected return is predicted by the CAPM for a stock with a beta of 1.5?