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Which of the following statements about opportunity costs is incorrect?
a. The opportunity cost rate to be applied to any investment is the rate of return that could be earned on alternative investments of similar risk.
b. In general, higher-risk investments should have higher opportunity costs than lower-risk investments have.
c. Opportunity cost rates are normally obtained by examining the returns on securities investments.
d. The opportunity cost rate typically is applied in discounting situations (as opposed to compounding).
e. Say you just inherited $10,000. Because this money cost you nothing, it has an opportunity cost rate of zero.
Discuss in your own words what are ethics in corporate finance and what are the consequences of unethical behavior?
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An investor purchases a stock for $53 and a put option for $.65 with a strike price of $49. The investor also sells a call option for $.65 with a strike price of $60. What is the maximum profit and loss for this position?
A firm has a market value equal to its book value. Currently, the firm has excess cash of $700 and other assets of $7,000. Equity is worth $7,700. The firm has 550 shares of stock outstanding and net income of $900. What will the new earnings per sha..
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