Quiz Ch 16 – Characteristics of Unlevered Firms with No Taxes
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What accurately describes an unlevered firm that does NOT pay taxes?
Quiz Ch 16 – Debt Preference Based on MM Proposition II
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What proportion of debt should a company aim for when the cost of debt is 6%, the cost of equity is 10%, and the corporate tax rate is 21% under MM Proposition II in the absence of taxes and assuming no bankruptcy risk?
Quiz Ch 16 – Enhancing Binomial Option Pricing Accuracy
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
What is required to make a binomial option price closely match the Black Scholes price?
Quiz Ch 16 – Exploiting Mispriced Puts with Arbitrage
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
How should you take advantage of undervalued puts through riskless arbitrage?
Quiz Ch 16 – Hedge Ratio in Correlated Option and Stock Returns
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
What does the hedge ratio equal in a two-state binomial option model with perfectly correlated options and stock returns?