1. Be able to draw, explain, and interpret a graph of the intrinsic value of both put and call options. You should be able to do this excluding premium and also including premium.
2. A stock is expected to pay dividends in 12 periods. The first dividend will be $4.20 and subsequent dividends are forecasted to stay constant for the foreseeable future. If the required return on the stock is 7.5%, what is its current value?
3. Describe three methods of capital budgeting analysis (e.g.: NPV, IRR, MIRR) and describe how the manager of a small electronics sales company would analyze an expansion into a new market.