Assume a stock index consists of many firms who have recently split their stock. Which of

20, r = 0.06 and the stock’s expected return is 12.0%. What is the discount rate for a $45.00 strike European call option （）？

A．38．2%

B．39．1%

C．42．5%

D．45．6%

A.The stock index will soar tomorrow, depending on it.

B.The stock index will soar tomorrow, depend on it.

C.The stock index will soar tomorrow, depending of it.

D.The stock index will soar tomorrow depend of it.

A.0．046

B.0．074

C.0．089

D.0．099

A.20%

B.15%

C.10%

D.5%

A.–0．52

B.–0．42

C.–0．32

D.–0．22

A.＄1．05 loss

B.＄1．05 gain

C.＄1．12 gain

D.＄1．12 loss

e portion of their (61) out of stocks and into (62) to protect themselves against further declines in the market, PI programs attempt to hedge against the possibility of a market decline by (63) stock index futures contracts or stock index options (buying stock index put options). The more the market falls, the more futures and options contracts are sold by PI programs. If the market continues to fall, the rise in the value of the portfolio' futures and option positions cushions the decline in the value of the portfolio' common stocks. PI managers believe that such hedging programs using futures and options involve lower transaction costs and provide greater (64) than the traditional method of actually selling stocks and buying treasury (65)

(46)

A．treasure

B．assets

C．investment

D．capital

ndex, P/E ratio lower than the median P/E ratio, and a price-book value ratio lower than the median price-book value ratio. The stocks so selected would be mostappropriate for portfolios of which type of investors？

A. Value investors.

B. Growth investors.

C. Market-oriented investors.

(c) Without changing the advice you have given in (b), or varying the terms of Luke’s will, explain how Mabel

could further reduce her eventual inheritance tax liability and quantify the tax saving that could be made.

(3 marks)

The increase in the retail prices index from April 1984 to April 1998 is 84%.

You should assume that the rates and allowances for the tax year 2005/06 will continue to apply for the

foreseeable future.

(ii) Write a letter to Donald advising him on the most tax efficient manner in which he can relieve the loss

incurred in the year to 31 March 2007. Your letter should briefly outline the types of loss relief available

and explain their relative merits in Donald’s situation. Assume that Donald will have no source of income

other than the business in the year of assessment 2006/07 and that any income he earned on a parttime

basis while at university was always less than his annual personal allowance. (9 marks)

Assume that the corporation tax rates and allowances for the financial year 2004 and the income tax rates

and allowances for 2004/05 apply throughout this question.

Relevant retail price index figures are:

January 1998 159·5

April 1998 162·6