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1. What does an net present value of zero imply?

A. The investment is earning a return that exactly matches the required return.

B. The investment never pays back its initial cost.

C. The investment should be rejected even if the discount rate is lowered.

D. The investment has an expected return that is less than the required return.

2. You purchased a stock for $36 a share, a call option with an exercise price of $35 and a premium of $3, and a put option with an exercise price of $35 and a premium of $2. What will be your net profit if you close out all three positions when the stock is selling for $37 a share?

a. $3

b. $2

c.-$1

d. -$2

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92873231

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