1) You sold four WXO 35 call option contracts at a quoted price of $.38. What is your net gain or loss on this investment if the price of WXO is $38.20 on the option expiration date?
a) $118
b) $-1,363
c) $-1,246
d) $1,363
e) $-1,128
f) Other, specify.
2) You are considering a project which has been assigned a discount rate of 6%. If you start the project today, you will incur an initial cost of $3,450 and will receive cash inflows of $2,070 a year for 2 years. If you wait one year to start the project, the initial cost will rise to $3,740 and the cash flows will increase to $2,506 a year for 2 years. What is the value of the option to wait?
a) $611.42
b) $461.00
c) $1,519.50
d) $517.01
e) $565.14
f) Other, specify.
3) Calculate the duration (in years) of a 4-year $1,000 face value bond, which pays 8% coupons annually throughout maturity and has a yield to maturity of 9%.
a) 3.29
b) 3.57
c) 3.69
d) 3.89
e) 4.00
f) Other, specify