You buy a share of the common stock of game maker Dzenga Wooden Puzzle Games. The stock is popular right now and it has a P/E ratio of 95. The firm's earnings and dividends per share are both $1.55 per share. If Dzenga's earnings don't grow in the future, how long can you expect to wait until you recover the cost of your investment?
A) 47.5 years
B) 61.3 years
C) 82,7years
D) 95.0years
A college endowment fund is committed to purchasing stock in 3 months when the next installment from its capital campaign is received. To reduce its price risk the fund could:
I. buy stock index put options
II. buy stock index call options
III. buy stock index futures
IV. sell stock index futures.
A) I or III
B) II or III
C) I or IV
D) II or IV