1. A European put option on a stock with 50 days until expiration has an exercise price of $80. The underlying stock is trading at $65 and the risk-free rate is 4%.
The theoretical maximum price for this option is closest to:
A $15.00.
B $79.57.
C $80.00.
D infinity.
2. The weighted average cost of capital (WACC) is:
the required rate of return for all of a firm's capital investment projects.
the required rate of return for a firm's average risk projects.
not applicable for use by MNE.
equal to 13%.