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Which one of the following events will most hake result in a higher pence-earnings ratio for a compacts common shares'?

  1. Investors4 required rate of return on the common shares fans.
  2. The rate of growth in dividends is expected to deckle
  3. The concord is expected to enter a recession,
  4. The addend yield increases when the dividend per share remains unchanged.

Answer(s): A

Explanation:

A decrees in investors' required rate of return will cause share prices to go up. which with result in a higher P/E ratio



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If a call option is "out-of-the-money"

  1. It is not worth exercising.
  2. The value of the underlying asset is less than the exercise price.
  3. The option no longer exists
  4. It is not worth exercising, and the value of the underlying asset is less than the exercise pence

Answer(s): D

Explanation:

When the value of the asset underlying a call option is less man the exercise pence of me the option is out-of the-money, which means it is not worth exercising.



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The type of open that does not have the barong of stock is called a(n)

  1. Covered option,
  2. Unsecured option.
  3. Naked option
  4. Put option.

Answer(s): C

Explanation:

A naked or uncovered option is a call option that does not have the backing of stock. Thus, the option writer will have to purchase the underlying stock if the call option is exercised.



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A contractual arrangement that gives the owner the right to buy or sail an asset at a hexed price at any moment in time before r on a specified date is a (n)

  1. European option.
  2. Foreign option,
  3. Future option.
  4. American option.

Answer(s): D

Explanation:

An American upon is a contractual arrangement that gives the owner the right to buy or sell an asset at a axed price at any moment in time before or on a specified date.






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