List three types of traders in futures‚ forward‚ and options markets i. _ _ _ _ _ _ _ _ ii. _ _ _ _ _ _ _ _ iii. _ _ _ _ _ _ _ _ 2. Which of the following is not true (circle one) a. When a CBOE call option on IBM is exercised‚ IBM issues more stock b. An American option can be exercised at any time during its life c. An call option will always be exercised at maturity if the underlying asset price is greater than the strike price d. A put option will always be exercised at maturity if the strike price
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types of option contract‚ whether in exercising ability or difference in values ‚ And two types will be discussing in this presentation. Firstly‚ the American style of option contract‚ gives you the flexibility in using it and doing the transaction at any point of time up to the expiration day. Secondly‚ the European style of option contract‚ allows the investor to use the option only during the expiration day. And what really important is that all the options gives the investor the option but not
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Executive Summary Berkshire Hathaway has made a bid for the remaining portion of GEICO stock. This report reviews the offer initiated by Warren Buffett. The details of this report include: • Valuation of GEICO stock. The $70 offer made by Warren Buffett and Berkshire Hathaway includes a 26% premium over the current GEICO stock price of $55.75. This report attempts to determine a range of appropriate stock prices for GEICO. Using the Gordon dividend discount model‚ along with historical dividend
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Stock dividend * Definition: * A corporate distribution to shareholders declared out of profits‚ at the discretion of the directors of the corporation‚ which is paid in the form of shares of stock‚ as opposed to money‚ and increases the number of shares. * A dividend paid as additional shares of stock rather than as cash. If dividends paid are in the form of cash‚ those dividends are taxable. When a company issues a stock dividend‚ rather than cash‚ there usually are not tax consequences
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The “Stock Market” is a term that actually describes several markets such as the New York Stock Exchange NASDAQ‚ where the stocks of companies are traded. Shares in a company are sold and the shareholders then become part owners of the company. Offering shares of stock raises money for continued research and development of company products or services. When investing in a company‚ the goal is to buy shares at a low price and then sell them at a higher price. Individual stocks may go up
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investing in fixed-interest securities. a. True b. False 2. Investments through a stock exchange are limited to ordinary shares issued by listed corporations. a. True b. False 3. Portfolio theory contends that a diversified share portfolio enables an investor to significantly reduce the portfolio’s exposure to systematic risk. a. True b. False 4. A share that has a beta of one is twice as risky as an average share listed on a stock market. a. True b. False 5. Shares that typically demonstrate a negative price
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PREFERRED STOCK VERSUS COMMON STOCK The primary advantage to an investor of holding preferred stock compared with common stock is that the preferred stock return is somewhat more predictable (more certain). The issuing company will generally make a real effort to try to avoid defaulting on the preferred stock dividend. Since the return to preferred stock is reasonably well defined and since the preferred stockholders precede the common stockholders (the preferred dividends are paid before the
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TRADING STOCKS Stock trading has become one of the most popular and efficient ways to make money since it is easy to access and it could bring a lot of money back to investors. With some extra money‚ anyone can purchase stocks from a company or corporation and make profit. A stock is basically a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings. There are two main types of stock: common and preferred. Common stock usually
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price—of a stock depends on the volatility of the stock market in general. For example‚ consider the following variables pertaining to Amazon stock: AMZN = the fractional change in the price of Amazon stock on a day‚ MKT = the fractional change in the market on that same day. The data file Amazon.xls contains 503 historical values of these two variables; thus‚ for example‚ the first value of 0.005193 for AMZN and −0.01003 for MKT means that‚ on that particular day‚ the price of Amazon stock increased
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covered call options on the resources of the different countries that need the funds. An options strategy is when an investor holds a long position (owns the asset: in our case mineral) in an asset and writes (sells) call options on that same asset in an attempt to generate increased income from the asset. This strategy is often employed when an investor has a short-term neutral view on the asset and for this reason holds the asset long and simultaneously have a short position via the option to generate
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