1 Your broker recommends that you purchase ABC Inc. at $60. The stock pays a $

1 Your broker recommends that you purchase ABC Inc. at $60. The stock pays a $2.40 dividend which (like its per share earnings) is expected to grow annually
at 8 percent. If you want to earn 12% on your funds what is the valuation of the stock?

Multiple choice (Only 1 answer is right)

2 The Writer of a Naked call option wants____

a the prices of the stock and the call to rise

b the prices of the stock and the call to fall

c the prices of the stock to fall and the call to rise

d the prices of the stock to rise and the call to remain stable.

3 If the investor sells a stock Short that individual reduces the risk of loss by_____

a buying a put

b buying a call

c entering a limit order to sell the stock if its price declines

d increasing the collateral with broker

4 If the investor anticipates that the price of stock will be Stable he or she may _____

a sell a staddle

b buy a straddle

c buy a call

d buy a put

5 If the investor anticipates that the price of stock will fluctuate this individual may___

a sell a call and sell a put

b buy a call and buy a put

c buy a call and sell a put

d sell a call and buy a put

The questions originated from the Textbook- Introduction to Investments (10th edition) from the author: Herbert B. Mayo.

Pls show the work of calculation also. Thank you!