1. You are a portfolio manager and one of your stocks trades for $35 per share. You think the longterm prospects for the company are good, but you’re concerned that the stock will not change much in price for the next 6 months. You should: A. Buy $40 call B. Sell $30 put C. Buy $30 put D. Texas Hedge E. Sell $40 call.
2. Isaac received a promotion, which includes a permanent raise. How should he change the proportion of municipal bonds in his portfolio? A. No change B. Increase because his income is in a lower tax bracket C. Decrease because his income is in a lower tax bracket D. Increase because his income is in a higher tax bracket E. Decrease because his income is in a higher tax bracket.