1. A stock had returns of 20 percent, 20 percent, 16 percent, 11 percent, 17 percent, and 14 percent over the last six years. What is the arithmetic return for the stock? What is the Geometric return for the stock?
2. Price a one year American put option with strike price 45, written on a $50 stock. Use a two step tree, with 6 month time steps. Volatility is 15%. The stock will pay a dividend in 7 months time of $2. Interest rates are 3%. Use the binomial tree.
3. Identify three common goals of companies and unions. Contrast these common goals with the conflicting goals of unions and management.