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What is the expected rate of return for a stock

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Reference no: EM133021639

Question - Answer the Following Statements Precisely

1) What is the difference between option premium and option price?

2) According to CAPM, what is the expected rate of return for a stock with a beta of 1.2, when the risk-free rate is 6% and the market rate of return is 12%?

3) An investor buys a put on a stock selling for $60, with a strike price of $55 for a $5 premium. Find the maximum gain.

4) In a 5-year period, the annual returns on an investment are 5%, -3%, -4%, 2% and 6%. Find the standard deviation of annual returns on this investment.

Reference no: EM133021639

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