Question 1. Why might a stock dividend or a stock split be of limited value to an investor? Does it make sense for a corporation to repurchase its own stock? Explain.
Question 2. Suggest two areas where the use of futures contracts are most common. What percent of the value of the underlying security is typical as a down payment in a futures contract?
Question 3. You buy a stock option with an exercise price of $50. The cost of the option is $4. If the stock ends up at $56, indicate whether you have a profit or loss with a call option? With a put option?