1. When Black-Scholes developed their option pricing model, what did they assume about exercising the option?
2. Boyd purchases a snow blower costing $1,752 by taking out a 13.5% add-on installment loan. The loan requires a 35% down payment and equal monthly payments for 2 years. How much is the finance charge on this loan?
3. How many securities does it take to make a portfolio that can be considered to be as diversified as the overall market for those securities? In your answer, be sure to justify your answer from a financial and statistical standpoint.