Fight Finance

(a) Global economic recession.

(b) A major terrorist attack, grounding all commercial aircraft in the US and Europe.

(c) An increase in corporate tax rates.

(d) The outbreak of world war.

(e) A company's poor earnings announcement.

(a) Lower yields to maturity.

(b) Higher probabilities of default.

(c) Lower coupon rates when priced at par.

(d) Lower total risk.

(e) Lower credit risk.

(a) Are long debt.

(b) Invest in debt.

(c) Are owed money.

(d) Provide debt funding.

(e) Have debt liabilities.

(a) Sole traders.

(b) Partnerships.

(c) Corporations.

(d) All of the above.

(e) None of the above

(a) Low debt to assets ratios.

(b) High quick ratios.

(c) Low interest coverage ratios.

(d) Positive amounts of net working capital.

(e) High net profit margins.

(a) Alice has $6,000 cash, owes $10,000 credit card debt due immediately and 100% owns a sole tradership business with assets worth $10,000 and liabilities of $3,000.

(b) Billy has $10,000 cash, owes $6,000 credit card debt due immediately and 100% owns a corporate business with assets worth $3,000 and liabilities of $10,000.

(c) Carla has $6,000 cash, owes $10,000 credit card debt due immediately and 100% owns a corporate business with assets worth $10,000 and liabilities of $3,000.

(d) Darren has $10,000 cash, owes $6,000 credit card debt due immediately and 100% owns a sole tradership business with assets worth $3,000 and liabilities of $10,000.

(e) Ernie has $1,000 cash, lent $3,000 to his friend, and doesn't have any personal debt or own any businesses.

(a) var(X) or ##\sigma_X^2##

(b) sd(X) or ##\sigma_X##

(c) 1

(d) 0

(e) Mathematically undefined

(a) A price rise of $0.087571 per barrel.

(b) A price rise of $0.31 per barrel.

(c) A price rise of $3.41 per barrel.

(d) A price rise of $3.54 per barrel.

(e) A price rise of $3.894 per barrel.

(a) Alice's net position is short 3 contracts.

(b) Bob's net position is short 2 contracts.

(c) Chris's net position is long 3 contracts.

(d) Delta's net position is short 3 contracts.

(e) Open interest is 5 contracts and daily trading volume is 10 contracts.

(a) Options are always worth more than or equal to equivalent European-style options.

(b) Call options on dividend-paying stocks should sometimes be exercised just before the dividend.

(c) Put options on dividend-paying stocks should sometimes be exercised just after the dividend.

(d) Call options should be exercised now if the intrinsic option value ##(S-K)## is greater than the expected present value of the option’s future payoffs.

(e) Put options should be exercised now if the intrinsic option value ##(K-S)## is less than the expected present value of the option’s future payoffs.